[489] Paul D. Clement, with whom Jeffrey S. Bucholtz, Erin E. Murphy, King & Spalding, LLP, Timothy M. Reynolds, Eve G. Burton, Holme, Roberts & Owen, LLP, Matthew J. Oppenheim, and Jennifer L. Pariser were on brief, for plaintiffs-appellants.

Jeffrey Clair, with whom Tony West, Assistant Attorney General, Carmen Ortiz, United States Attorney, and Scott R. McIntosh were on brief, for the United States as plaintiff-appellant.

Charles R. Nesson and Jason Harrow for defendant-appellee. Julie A. Ahrens, with whom Anthony T. Falzone, Stanford Law School Center for Internet & Society, Michael Barclay, Corynne McSherry, Electronic Frontier Foundation, Jason M. Schultz, Samuelson Law, Technology & Public Policy Clinic, were on brief for Electronic Frontier Foundation, amicus curiae.

Before LYNCH, Chief Judge, TORRUELLA and THOMPSON, Circuit Judges.

LYNCH, Chief Judge.

Plaintiffs, the recording companies Sony BMG Music Entertainment, Warner Brothers Records Inc., Arista Records LLC, Atlantic Recording Corporation, and UMG Recordings, Inc. (together, “Sony”), brought this action for statutory damages and injunctive relief under the Copyright Act, 17 U.S.C. § 101 et seq. Sony argued that the defendant, Joel Tenenbaum, willfully infringed the copyrights of thirty music recordings by using file-sharing software to download and distribute those recordings without authorization from the copyright owners.

The district court entered judgment against Tenenbaum as to liability. The jury found that Tenenbaum's infringement of the copyrights at issue was willful and awarded Sony statutory damages of $22,500 for each infringed recording, an award within the statutory range of $750 to $150,000 per infringement that Congress established for willful conduct. See 17 U.S.C. § 504(c).

Upon Tenenbaum's motion for a new trial or remittitur, the district court skipped over the question of remittitur and reached a constitutional issue. It reduced the damage award by a factor of ten, reasoning that the award was excessive in violation of Tenenbaum's due process rights. See Sony BMG Music Entm't v. Tenenbaum, 721 F.Supp.2d 85 (D.Mass.2010).

The parties have cross-appealed. Sony argues the district court erred, for a number of reasons, in reducing the jury's award of damages and seeks reinstatement of the full award. It defends the liability and willfulness determinations.

Tenenbaum challenges both liability and damages. He challenges the Copyright Act's constitutionality and the applicability of the Copyright Act and its statutory damages provision to his conduct. Tenenbaum also argues that the district court committed various errors that require a new trial, and that a further reduction of the damage award is required by the due process clause.

The United States, intervening to defend the constitutionality of the Copyright Act, argues that the district court erred in bypassing the question of common law remittitur to reach a constitutional issue.

We reject all of Tenenbaum's arguments and affirm the denial of Tenenbaum's motion for a new trial or remittitur based on claims of error as to the application of the Copyright Act and error as to the jury instructions. However, the court erred [490] when it bypassed Tenenbaum's remittitur arguments based on excessiveness of the statutory damages award and reached the constitutional due process issue. We agree with the United States that the doctrine of constitutional avoidance requires consideration of common law remittitur before consideration of Tenenbaum's due process challenge to the jury's award. We reverse the reduction in damages, reinstate the original award, and remand for consideration of the common law remittitur question. We comment that this case raises concerns about application of the Copyright Act which Congress may wish to examine.

A. District Court Proceedings

Sony brought this action against Tenenbaum in August 2007, seeking statutory damages and injunctive relief pursuant to the Copyright Act. Sony pursued copyright claims against Tenenbaum for only thirty copyrighted works, even though it presented evidence that Tenenbaum illegally downloaded and distributed thousands of copyrighted materials.

Sony's complaint elected to seek statutory, not actual damages, pursuant to 17 U.S.C. § 504(c). For each act of infringement, § 504(c) establishes an award range of $750 to $30,000 for non-willful infringements, and a range of $750 to $150,000 for willful infringements.

Tenenbaum filed several pre-trial motions, including a motion to dismiss Sony's complaint on the ground that the Copyright Act is unconstitutional.^[1] After the United States intervened to defend the constitutionality of the Act, the district court rejected Tenenbaum's motion without prejudice to allow Tenenbaum to challenge the constitutionality of any award ultimately issued by the jury. The district court also considered and rejected a fair use defense put forth by Tenenbaum.

A five-day jury trial was held from July 27 to July 31, 2009. Following the conclusion of testimony, the district court partially granted Sony's motion for judgment as a matter of law, holding that Sony owned the thirty copyrights at issue and that Tenenbaum infringed those copyrights through his downloading and distribution activities. The court left to the jury the questions of (1) whether Tenenbaum's infringement was willful and (2) the amount of statutory damages to be awarded. In instructing the jury, the court informed it of the statutory range Congress had established for willful and non-willful infringements and articulated a non-exhaustive list of factors it could consider in determining the damage award.

The jury found that Tenenbaum had willfully infringed each of Sony's thirty copyrighted works. The jury returned a damage award, within the statutory range, of $22,500 per infringement, which yielded a total award of $675,000.

Tenenbaum filed a post-trial motion seeking a new trial on various grounds^[2] or [491] a reduction of the jury's award. Tenenbaum argued that although the jury's award fell within the statutory range prescribed by Congress, (1) common law remittitur was both available to the court and appropriate in this case, and (2) the award was excessive such that it violated due process. The court rejected Tenenbaum's arguments for a new trial.

Regarding the size of the award, the court declined to decide the common law remittitur issue, based on its assumption that Sony would not agree to a reduction of the award and that remittitur would only necessitate a new trial on the issue of damages, and that even after a new trial the same issue of constitutional excessiveness would arise, so, in its view decision on the issue was inevitable. The court itself then found that the award violated due process, over objections that it utilized an impermissible standard, and reduced the award from $22,500 per infringement to $2,250 per infringement for a total award of $67,500.

B. Factual Background

We recite the underlying facts in the light most favorable to the jury's verdict. Analysis Grp., Inc. v. Cent. Fl. Invs., Inc., 629 F.3d 18, 20 (1st Cir.2010).

1. The Music Recording Industry and Peer–to–Peer Networks

Plaintiffs are several of the largest recording companies in the United States, and engage in discovering, developing, and marketing music recording artists and distributing the musical works those artists record. They hold exclusive rights to copy and distribute various music recordings under United States copyright law, including the thirty recordings at issue in this case, and their primary source of revenue is the sale of those recordings.

Plaintiffs only sell copies of their copyrighted recordings for profit. They never sell licenses to their copyrighted works that include rights to upload recordings to the internet for public consumption. The value of such a blanket license would be enormous, as the grant of such a license would deprive the companies of their source of income and profits and essentially drive them out of business.^[3]

In the late 1990s, copyrighted music recordings, including those held by the plaintiffs, began to appear on file-sharing software called “peer-to-peer networks” without the authorization of the copyright holders.

Peer-to-peer networks enable individuals both to make digital files stored on their own computers available to other network users and to download such files from the computers of others. Files shared between users of these networks do not pass through a central computer, but are instead exchanged directly from one user's computer to another. Through the use of these peer-to-peer networks, the unauthorized and illegal downloading and distribution of copyrighted materials—especially music recordings—became commonplace. See Metro–Goldwyn–Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 919–20, 923, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005) (describing operation of peer-to-peer networks and noting that [492] their advent has likely resulted in copyright infringement on a “staggering” scale). Because music recordings are loaded onto peer-to-peer networks in digital form, recordings downloaded from peer-to-peer networks are virtually indistinguishable from recordings purchased through lawful means, making enforcement difficult.

The proliferation of these networks from 1999 onward and the piracy they enable has had a significant negative impact on the recording industry. Between 1999 and 2008, the recording industry as a whole suffered a fifty percent drop in both sales and revenues, a figure plaintiffs attribute to the rise of illegal downloading. This reduction in revenues has, in turn, diminished recording companies' capacities to pursue, develop and market new recording artists. It also affected the companies' employees. The loss in revenues has resulted in a significant loss of industry jobs. Sony BMG Music Entertainment and Warner Music Group, for example, each have suffered a fifty percent reduction in workforce since 2000.

Shortly after peer-to-peer networks first appeared, plaintiffs acknowledged the threat they posed to their industry and initiated a broad campaign to address the illegal infringement of copyrighted materials. They started educating the public that downloading and distributing copyrighted songs over peer-to-peer networks constituted illegal copyright infringement. Plaintiffs also brought legal actions as part of their campaign, and initially targeted the proprietors of peer-to-peer networks, not the individuals who actually used those networks to illegally procure and distribute copyrighted materials. See, e.g., id. at 940, 125 S.Ct. 2764 (holding network may be held liable for copyright infringement undertaken by third party network users where network promotes such infringements even if network has other, legal uses). Although these litigation efforts succeeded at shutting down particular networks, individual infringers continued to engage in illegal conduct by finding new peer-to-peer networks through which to download copyrighted songs.

Consequently, record companies began to identify and pursue legal actions against individual infringers. The industry identified Internet Protocol (IP) addresses of users known to be engaged in a high volume of downloading and distributing copyrighted materials, and initiated lawsuits against those users. See Atl. Recording Corp. v. Heslep, No. 06–CV–132, 2007 WL 1435395 at *1–3 (N.D.Tex. May 16, 2007) (detailing recording industry's litigation efforts). These suits began in 2002 and were widely-publicized.^[4]

2. Tenenbaum's Conduct

Tenenbaum was an early and enthusiastic user of peer-to-peer networks to obtain and distribute copyrighted music recordings. He began downloading and distributing copyrighted works without authorization in 1999. In that year, he installed the Napster peer-to-peer network on his desktop computer at his family's home in Providence, Rhode Island. He used Napster both to download digital versions of copyrighted music recordings from other network users and to distribute to other users digital versions of copyrighted music recordings already saved on his own computer.

Because it enabled copyright infringement, see [493] A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir.2001), the Napster network was shut down in 2001. This did not stop Tenenbaum from downloading and distributing copyrighted works; he instead began using other peer-to-peer networks for the same illegal purposes. These networks included AudioGalaxy, iMesh, Morpheus, Kazaa, and Limewire. Tenenbaum shifted to these other networks after Napster's termination despite his knowledge that Napster was forced to close on account of a lawsuit brought against it for copyright infringement.

Tenenbaum continued to download and distribute copyrighted materials through at least 2007. During that time span he accessed a panoply of peer-to-peer networks for these illegal purposes from several computers. From 1999 until 2002, he primarily downloaded and distributed copyrighted works to and from his desktop computer at his family's home in Providence. He left home to attend Goucher College in Baltimore, Maryland, in 2002, at which point he began using a laptop to download and distribute copyrighted works. Following his graduation from Goucher in 2006, he began using a second laptop for these purposes in tandem with his other computers. Over the duration of Tenenbaum's conduct, he intentionally downloaded thousands of songs to his own computers from other network users. He also purposefully made thousands of songs available to other network users. He did this in the period after lawsuits were brought, and publicized, against individuals who downloaded and distributed music without authorization. At one point in time in 2004 alone, Tenenbaum had 1153 songs on his “shared-directory” on the Kazaa network. ^[5] Any of those files within Tenenbaum's shared directory could be easily downloaded by other Kazaa users. Although there was no way to determine the exact number of times other users had downloaded files from Tenenbaum's shared directory, it was frequent. Most of the networks Tenenbaum used had a “traffic tab” that informed him of the frequency with which other users were downloading his shared files. Tenenbaum regularly looked at the traffic tab, and he admitted it “definitely wasn't uncommon” for other users to be downloading materials from his computer.

Tenenbaum knew that his conduct, both his downloading and distribution, was illegal and received warnings the industry had started legal proceedings against individuals. He received several warnings regarding the potential liability his actions carried with them. While Tenenbaum was at Goucher College in 2002, his father, Dr. Arthur Tenenbaum, called him to warn him that his use of peer-to-peer networks to obtain and distribute music recordings was unlawful. Dr. Tenenbaum knew that his son was illegally downloading music because, prior to leaving for college, Tenenbaum had showed his father the array of songs that could be downloaded from the Kazaa network. After Dr. Tenenbaum became aware that lawsuits were being brought against individuals who used file-sharing programs to download and distribute music, he instructed Tenenbaum not to continue to engage in such conduct. Dr. Tenenbaum testified that, during their conversation, Tenenbaum did not appear [494] concerned about the consequences of his actions. Despite his father's request, Tenenbaum continued his illegal activity.

Tenenbaum also received direct warnings from Goucher College. Each year Tenenbaum received a Goucher student handbook warning that using the college's network to download and distribute copyrighted materials was illegal, but he did so anyway. The handbook also warned that illegally downloading and distributing music files could subject the copyright infringer to up to $150,000 of liability per infringement, alerting Tenenbaum to his potential exposure for violating the law. The Fall 2003 handbook issued to Tenenbaum at the start of his sophomore year cautioned:

To avoid the risk of potential lawsuits due to copyright infringement, the college is advising students to carefully restrict the use of file sharing applications to material that is legal to share.... Persons found to be infringed may be held liable for substantial damages and attorneys fees. The law entitles a plaintiff to seek statutory damages of $150,000 for each act of willful infringement.... In addition, if you violate copyright law by engaging in file sharing, you may be subject to discipline and other applicable college policy.

Tenenbaum received handbooks containing similar language during each of his four years at Goucher, but was unfazed and continued.

Tenenbaum also knew the college took this seriously and had itself acted to stop this illegal activity. By the end of his undergraduate studies at Goucher, the school had implemented so many technological restrictions on its network—which he knew were designed to prevent illegal downloading of music files—that peer-to-peer programs “wouldn't work at all.”

The Tenenbaums' internet service provider at home in Providence, Cox Communications, also warned against using the internet to illegally infringe copyrighted materials. In 2003, for example, the terms of service they offered to their customers prohibited customers from using the internet service “to post, copy, transmit or disseminate any content that infringes the patents, copyrights, trade secrets, trademarks or proprietary rights of any party.” It further provided that “Cox assumes no responsibility, and you assume all risks regarding the determination of whether material is in the public domain or may otherwise be used by you for such purposes.”

In a September 2005 letter, plaintiffs themselves informed Tenenbaum that he had been detected infringing copyrighted materials and notified him that his conduct was illegal. The letter stated: “We are writing in advance of filing suit against you in the event that you have an interest in resolving these claims.”^[6] The letter urged Tenenbaum to consult with an attorney immediately, and explained that the recording companies were prepared to initiate a legal action against Tenenbaum because of the severe impact of his actions on the industry:

Copyright theft is not a victimless crime. People spend countless hours working hard to create music—not just recording artists and songwriters, but also session players, backup singers, sound engineers and other technicians. In addition, the music industry employ thousands of other people, such as CD-plant workers, warehouse personnel, record store clerks and developers of legitimate online music services. They all depend [495] on sale of recordings to earn a living. So do record companies, which routinely invest millions of dollars to discover and sign promising artists, and then to produce and market their recordings. In addition, piracy eats away at the investment dollars available to fund new music and, in effect, erodes the future of music.

The letter also instructed Tenenbaum to preserve any relevant evidence including “the entire library of recordings that you have made available for distribution as well as any recordings you have downloaded....”^[7]

The letter from Sony resulted in a conversation between Tenenbaum and his mother regarding his use of peer-to-peer networks. During that conversation, Tenenbaum claimed that it was “impossible ... to know” who was responsible for the infringements referenced in Sony's letter.

Despite these warnings and his knowledge that he was and had been engaging in illegal activity which could subject him to liability of up to $150,000 per infringement, Tenenbaum continued the illegal downloading and distribution of copyrighted materials until at least 2007—a full two years after receiving the letter from Sony. He stopped his activity only after this lawsuit was filed against him.

[Strong evidence established that Tenenbaum lied in the course of these legal proceedings in a number of ways. In his initial responses to Sony's discovery requests, Tenenbaum represented he “had no knowledge or recollection of online media distribution systems used or any dates” of such use. He also denied creating or using the “sublimeguy 14@ kazaa” account name that he had used to access various peer-to-peer networks, and he denied any knowledge of whether a peer-to-peer network had been installed on his computer.]

At trial, however, Tenenbaum admitted that each of these statements he had made was false. He made numerous admissions in his testimony as to the scope of his conduct from 1999 until 2007. He admitted to installing peer-to-peer networks on his computer, including Kazaa, Limewire, Audio Galaxy, iMesh, and Morpheus, so that he could download and upload music with “the least amount of wasted effort.” He admitted that he created the “sublimeguy 14@ kazaa” user account, downloaded songs from the networks using that account, and placed materials in shared folders on those networks so that other users could download the materials onto their own computers. On some occasions, he believed he was the first person to upload a particular music recording onto the network. He testified that he placed between 600 and 5,000 songs on the Goucher College peer-to-peer network for others to download. He further testified that he also copied illegally downloaded songs onto CDs and USB drives, both for personal use and to give to other individuals. He also explicitly admitted liability for downloading and distributing the thirty sound recordings at issue in the case.

Before the trial, Tenenbaum also attempted to shift responsibility for his conduct to other individuals by claiming they could have used his computer in order to illegally download and distribute the copyrighted works. These individuals included a foster child living in his family's home, burglars who had broken into the home, [496] his family's house guest, and his own sisters. His sisters and others he blamed testified that they had never illegally downloaded music and had no knowledge of who installed the file sharing software on Tenenbaum's computer.

Finally, when asked at trial about his efforts to attribute the blame for his actions to others, Tenenbaum admitted his own responsibility: “I used the computer, I uploaded, I downloaded music, this is what I did, that's how it is, I did it.”

Tenenbaum presents three arguments that he is not subject to the Copyright Act. First, Tenenbaum argues that the Copyright Act is unconstitutional under Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 118 S.Ct. 1279, 140 L.Ed.2d 438 (1998). Feltner held that the Seventh Amendment entitles a defendant to have a jury determine the amount of statutory damages under § 504(c), although Congress had provided that judges, not juries, would render statutory damage awards. He argues that Feltner somehow renders the statutory damages provision unconstitutional until Congress chooses to amend the statute.

Second, Tenenbaum argues that Congress did not intend the Act to impose either liability or statutory damages where the copyright infringements at issue amount to what he calls “consumer copying.”

Third, Tenenbaum argues that statutory damages are unavailable to Sony because, in his view, statutory damages, as a matter of Congressional intent, cannot be awarded absent a showing of actual harm, and he claims there was no harm.

We review such legal and constitutional questions de novo. United States v. S. Union Co., 630 F.3d 17, 24 (1st Cir.2010). None of these arguments has merit.

A. Constitutionality of the Copyright Act After Feltner

Tenenbaum did not clearly make the argument that Feltner renders 504(c) unconstitutional to the district court, and so it is waived. See Dillon v. Select Portfolio Servicing, 630 F.3d 75, 82 (1st Cir.2011).

Even were the argument not waived, it is both wrong and foreclosed by our circuit precedent. In Segrets, Inc. v. Gillman Knitwear Co., 207 F.3d 56 (1st Cir.2000), we considered Feltner's impact on a claim for statutory damages under § 504(c). We held that Feltner required remand to the district court so that a jury could determine both whether the infringements at issue were willful and the proper measure of statutory damages, necessarily rejecting any notion that statutory damages under § 504(c) were no longer available after Feltner. Id. at 63. We followed the same reasoning in Venegas–Hernandez v. Sonolux Records, 370 F.3d 183, 191–94 (1st Cir.2004) (interpreting and applying § 504(c) after Feltner).

Our sister circuits have likewise concluded that Feltner did not render § 504(c) unconstitutional. See, e.g., BMG Music v. Gonzalez, 430 F.3d 888, 892–93 (7th Cir.2005) (upholding statutory damages award under § 504(c) despite claim that Feltner rendered such an award unconstitutional); Columbia Pictures Television, Inc. v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1192 (9th Cir.2001) (rejecting argument that Feltner rendered “statutory damages provision of the Copyright Act ... unconstitutional in its entirety” and concluding Feltner “in no way implies that [497] copyright plaintiffs are no longer able to seek statutory damages under the Copyright Act”).

This conclusion is also required by Supreme Court precedent. Where the Court has found a particular federal statute to deprive defendants of jury rights in violation of the Seventh Amendment,^[8] the Court has deemed the offending portions of the statute inoperative while leaving the statute otherwise intact. See, e.g., Tull v. United States, 481 U.S. 412, 417 n. 3, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987) (upholding enforceability of Clean Water Act even though “[n]othing in the language of the ... Act or its legislative history implies any congressional intent to grant defendants the right to a jury trial” and the Seventh Amendment required that defendants be given such a jury trial right).

B. The Copyright Act and “Consumer–Copier” and Publisher–Copier Copyright Infringement

Tenenbaum argues to us that Congress never intended for the Copyright Act to impose liability or statutory damages against what he calls “consumer copiers.” That argument was not presented to the district court and is waived.^[9]

Even were the argument not waived, it must fail. We start with the inaccuracy of the labels that Tenenbaum's argument uses. Tenenbaum is not a “consumer-copier,” a term he never clearly defines. He is not a consumer whose infringement was merely that he failed to pay for copies of music recordings which he downloaded for his own personal use. Rather, he widely and repeatedly copied works belonging to Sony and then illegally distributed those works to others, who also did not pay Sony. Further, he received, in turn, other copyrighted works for which he did not pay. Nor can Tenenbaum assert that his was merely a “non-commercial” use and distribution of copyrighted works as those terms are used elsewhere in the Act.^[10] His use and distribution was for private gain and involved repeated and exploitative copying.

[498] Our analysis begins with the language of the Act, which we “construe ... in its context and in light of the terms surrounding it.” Succar v. Ashcroft, 394 F.3d 8, 23 (1st Cir.2005) (quoting Leocal v. Ashcroft, 543 U.S. 1, 9, 125 S.Ct. 377, 160 L.Ed.2d 271 (2004)) (internal quotation marks omitted). “It is well established that, when the statutory language is plain, we must enforce it according to its terms.” Jimenez v. Quarterman, 555 U.S. 113, 118, 129 S.Ct. 681, 172 L.Ed.2d 475 (2009).

In addition to the factual inaccuracy of his labels, Tenenbaum's argument that the Copyright Act immunizes his conduct from liability is contradicted by the plain language of the statute. The Copyright Act does not make the distinctions he urges between “consumer” and “non-consumer” infringement of copyrighted materials by copying and distribution. Instead, the Act renders those, like Tenenbaum, who use or distribute a copyrighted work without authorization liable in copyright. Indeed, the Act does not use the term “consumer” at all, much less as a term excluded from the category of infringers. Rather, the statute refers to “anyone” as potential infringers. 17 U.S.C. § 501(a).

The Act explicitly grants owners of “works of authorship”^[11] exclusive rights to, inter alia, “reproduce the copyrighted work in copies or phonorecords” and “distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.” 17 U.S.C. § 106. By the plain language of § 106, copyright owners, like Sony, have the exclusive right to reproduce copyrighted works in copies or phonorecords and to distribute those copies or phonorecords.

The Copyright Act contains no provision that could be interpreted as precluding a copyright owner from bringing an action against an infringer solely because the infringer was a consumer of the infringed products or acted with a so-called noncommercial purpose in his distribution of the works to others. Apart from the reality that the facts of record support neither characterization, 17 U.S.C. § 501(a) provides that “ anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 ... is an infringer of the copyright.” (Emphasis added). Further, under 17 U.S.C. § 501(b), “the legal or beneficial owner of an exclusive right under a copyright is entitled ... to institute an action for any infringement of that particular right committed while he or she is the owner of it.” (Emphasis added). Had Congress intended to limit copyright actions against so-called “consumer infringers” as Tenenbaum hypothesizes, it easily could have done so. See Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 227–28, 128 S.Ct. 831, 169 L.Ed.2d 680 (2008). Instead, subject to exceptions not relevant here, it extended liability to “ anyone ” who violates a copyright owner's exclusive rights and allowed those owners to pursue actions against “ any infringement.” 17 U.S.C. § 501 (emphasis added).

Moving from liability to damages, Tenenbaum's argument that statutory damages [499] are not available here is also refuted by the plain statutory language. Section 504 provides that “ an infringer of copyright is liable for either ... the copyright owner's actual damages and any additional profits of the infringer ... or statutory damages.” (Emphasis added). The statute does not condition the availability of either set of damage calculations on whether the offending use was by a consumer or for commercial purposes or not.

Congress drew distinctions in the Copyright Act where it meant to do so. For example, it distinguished between willful and non-willful infringements, subjecting willful infringers to a higher cap on statutory damage awards. See 17 U.S.C. § 504(c).

Where Congress wanted the Act to draw distinctions based on the nature of the use it also did so explicitly, such as with the fair use defense. See 17 U.S.C. § 107 (providing for fair use limitation on owner's exclusive rights and identifying the “purpose and character of the use” including “whether such use is of a commercial nature or is for nonprofit educational purposes” as a factor to consider in determining applicability of fair use limitation).^[12]

Further, where Congress intended to create other exceptions for solely personal or non-commercial use, it did so expressly. In two amendments which do not apply here, it drew such distinctions: (1) the Sound Recording Act of 1971, Pub. L. No. 92–140, 85 Stat. 391, which fully extended federal copyright protections to sound recordings but exempted certain reproductions of sound recordings made for personal use, and (2) the Audio Home Recording Act of 1992 (AHRA), Pub. L. No. 102–563, 106 Stat. 4237, codified at 17 U.S.C. § 1001 et seq., which provided some exemptions in other situations from copyright liability for infringements “based on the noncommercial use by a consumer.”^[13] 17 U.S.C. § 1008.^[14] These statutes refute Tenenbaum's argument.

Because Congress has enumerated a set of express exceptions, rules of statutory interpretation instruct that Congress intended to make no other exceptions than those specified. See Tenn. Valley Auth. v. Hill, 437 U.S. 153, 188, 98 S.Ct. 2279, 57 L.Ed.2d 117 (1978) (finding under maxim expressio unius est exclusio alterius that enumerated exceptions are the sole exceptions intended within the Endangered Species Act); see also Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (“[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.”) (quoting United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.1972)) (internal quotation marks omitted).

[500] The clarity of the statutory text compels the rejection of Tenenbaum's arguments. When a statute speaks with clarity to an issue, “judicial inquiry into the statute's meaning, in all but the most extraordinary circumstance, is finished.” Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475, 112 S.Ct. 2589, 120 L.Ed.2d 379 (1992). It is not within the province of the courts to rewrite Congressional statutes: that task is “for Congress to accomplish by further legislation.” United States v. Harriss, 347 U.S. 612, 620, 74 S.Ct. 808, 98 L.Ed. 989 (1954); see also Logan v. United States, 552 U.S. 23, 26–27, 128 S.Ct. 475, 169 L.Ed.2d 432 (2007) (refusing to stray from statutory text).

Asking us to ignore the text and the plain meaning of the statute, Tenenbaum argues Congress was unaware that suits like this could be brought and so could not have intended the statute to apply here. The argument is wrong both on the law and on the facts.

Congress did contemplate that suits like this were within the Act. Congress last amended the Copyright Act in 1999 to increase the minimum and maximum awards available under § 504(c). See Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, Pub. L. No. 106–160, 113 Stat. 1774. At the time, Congress specifically acknowledged that consumer-based, noncommercial use of copyrighted materials constituted actionable copyright infringement. Congress found that “copyright piracy of intellectual property flourishes, assisted in large part by today's world of advanced technologies,” and cautioned that “the potential for this problem to worsen is great.” H.R. Rep. No. 106–216, at 3 (1999), 1999 WL 446444, at *2. Indeed, the legislative history directly addresses this concern:

By the turn of the century the Internet is projected to have more than 200 million users, and the development of new technology will create additional incentive for copyright thieves to steal protected works. The advent of digital video discs, for example, will enable individuals to store far more material than on conventional discs and, at the same time, produce perfect secondhand copies.... Many computer users are either ignorant that copyright laws apply to Internet activity, or they simply believe that they will not be caught or prosecuted for their conduct. Also, many infringers do not consider the current copyright infringement penalties a real threat and continue infringing, even after a copyright owner puts them on notice that their actions constitute infringement and that they should stop the activity or face legal action. In light of this disturbing trend, it is manifest that Congress respond appropriately with updated penalties to dissuade such conduct. H.R. 1761 increases copyright penalties to have a significant deterrent effect on copyright infringement.

Id.^[15]

Even earlier, in 1997, Congress had explicitly amended the criminal component of [501] the Copyright Act to make clear that criminal liability for copyright infringement can be imposed even if an infringer's use of a copyrighted material is noncommercial. See No Electronic Theft Act (NET Act), Pub. L. No. 105–147, 111 Stat. 2678. The NET Act was enacted in response to United States v. LaMacchia, 871 F.Supp. 535 (D.Mass.1994), in which a court had barred prosecution of a student charged with wire fraud because even though he enabled others to download copyrighted software applications at no cost, he received no commercial gain from his activities and the criminal statute precluded prosecution where there was no commercial benefit conferred.

Congress made clear that it enacted the NET Act to “criminalize[ ] computer theft of copyrighted works, whether or not the defendant derives a direct financial benefit from the act(s) of misappropriation, thereby preventing such willful conduct from destroying businesses, especially small businesses, that depend on licensing agreements and royalties for survival.” H.R. Rep. 105–339, at 5 (1997), 1997 WL 664424, at *5.

Tenenbaum's argument that we may ignore the plain language of the statute and Congressional intent because relatively few lawsuits were brought against those in his position also goes nowhere. Again, both the factual and legal contentions are wrong.

Even if we assume that copyright owners have historically chosen first to litigate against the providers of new technologies of reproduction and dissemination rather than the users of those new technologies, see Tussey, Technology Matters: The Courts, Media Neutrality, and New Technologies, 12 J. Intell. Prop. L. 427 (2005), that may best be explained by the owners using a cost-benefit analysis, and says nothing about Congressional intent. Historically, the costs of prosecuting infringement actions against individual users could be thought by owners to have exceeded the benefits. That the copyright owners have turned to litigation against individual infringers only underscores that the balance of the copyright holder's cost-benefit analysis has been altered as peer-to-peer networks and digital media become more prevalent.

In any event, the argument is legally irrelevant. The Supreme Court has expressly instructed that courts apply the Copyright Act to new technologies. In Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984), the Court instructed that courts must “[a]pply[ ] the copyright statute, as it now reads, to the facts as they have been developed” even though Congress might ultimately “take a fresh look at this new technology, just as it so often has examined other innovations in the past.” Id. at 456, 104 S.Ct. 774.

The Supreme Court has made clear that it is particularly important for courts to take this tack when faced with novel Copyright Act issues. “[F]rom its beginning, the law of copyright has developed in response to significant changes in technology,” and as “new developments have occurred in this country, it has been the Congress that has fashioned the new rules that new technology made necessary.” Id.at 430–31, 104 S.Ct. 774. We reject Tenenbaum's invitation to usurp Congress's legislative authority and to disregard binding Supreme Court precedent.

[502] C. Statutory Damages under 17 U.S.C. § 504 and Actual Harm

Tenenbaum next argues that the statutory damages provision is nonetheless inapplicable because, in his view, as a matter of law there can be no statutory damages where “harm caused by a particular defendant has not been proved.” Again, he is wrong both as a matter of law and on the facts of record.

The district court properly rejected Tenenbaum's proffered interpretation of § 504. Section 504 clearly sets forth two alternative damage calculations a plaintiff can elect: actual damages and statutory damages. See 17 U.S.C. § 504(a) (providing that “an infringer of copyright is liable for either ... the copyright owner's actual damages and any additional profits of the infringer ... or statutory damages”) (emphasis added).

Under § 504(b), a plaintiff may elect to receive “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 the actual damages.”

Alternatively, under § 504(c), “the 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 any one work.” (Emphasis added). The statute makes clear that statutory damages are an independent and alternative remedy that a plaintiff may elect “instead of actual damages.”

Section 504's text reflects Congress's intent “to give the owner of a copyright some recompense for injury done him, in a case where the rules of law render difficult or impossible proof of damages or discovery of profits.” Douglas v. Cunningham, 294 U.S. 207, 209, 55 S.Ct. 365, 79 L.Ed. 862 (1935). The Supreme Court explained that before statutory damages were available, plaintiffs, “though proving infringement,” would often be able to recover only nominal damages and the “ineffectiveness of the remedy encouraged willful and deliberate infringement.” Id. The Supreme Court has since reaffirmed that “[e]ven for uninjurious and unprofitable invasions of copyright the court may, if it deems it just, impose a liability within statutory limits to sanction and vindicate the statutory policy.” F.W. Woolworth Co. v. Contemporary Arts, 344 U.S. 228, 233, 73 S.Ct. 222, 97 L.Ed. 276 (1952) (upholding statutory damage award of $5,000 for infringement even when actual damages of only $900 were demonstrated); see also L.A. Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 106, 39 S.Ct. 194, 63 L.Ed. 499 (1919) (finding the language chosen by Congress “shows that something other than actual damages is intended—that another measure is to be applied in making the assessment”).^[16]

Tenenbaum's argument also rests on the faulty assertion that Sony did not offer evidence of the harm it suffered as a result of Tenenbaum's conduct. Tenenbaum downloaded the thirty copyrighted works at issue and distributed those works to innumerable network users. Sony presented extensive testimony regarding the loss in value of the copyrights at issue that resulted from Tenenbaum's conduct, and the harm of Tenenbaum's actions to itself and the recording industry, including reduced [503] income and profits, and consequent job loss to employees.

Tenenbaum challenges the district court's jury instructions on several grounds, all but one of which were not preserved for appeal, and all of which fail.

We review preserved challenges to jury instructions de novo, and “look to the challenged instructions in relation to the charge as a whole, ‘asking whether the charge in its entirety—and in the context of the evidence—presented the relevant issues to the jury fairly and adequately.’ ” Kennedy v. Town of Billerica, 617 F.3d 520, 529 (1st Cir.2010) (quoting Goodman v. Bowdoin Coll., 380 F.3d 33, 47 (1st Cir.2004)). Even if the instructions were erroneous, we reverse only if the error “is determined to have been prejudicial based on a review of the record as a whole.” Mass. Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 72 (1st Cir.2009).

Absent adequate objections to the instructions, our review is for plain error, which requires that Tenenbaum show (1) that there was error, (2) that it was plain, (3) that it likely altered the outcome, and (4) that it was sufficiently fundamental to threaten the fairness, integrity or public reputation of the judicial proceedings. Gray v. Genlyte Grp., Inc., 289 F.3d 128, 134 (1st Cir.2002); Estate of Keatinge v. Biddle, 316 F.3d 7, 16 (1st Cir.2002). “The standard is high, and ‘it is rare indeed for a panel to find plain error in a civil case.’ ” Diaz–Fonseca v. Puerto Rico, 451 F.3d 13, 36 (1st Cir.2006) (quoting Chestnut v. City of Lowell, 305 F.3d 18, 20 (1st Cir.2002) (en banc) (per curiam)).

A. Tenenbaum's Preserved Challenge to the District Court's Instruction as to the Statutory Damage Range Under § 504(c)

Tenenbaum's only preserved instructional challenge is that the district court erred by instructing the jury about the range of statutory damages available to Sony under § 504(c).^[17] The district court instructed the jury that “[t]he Copyright Act entitles a plaintiff to a sum of not less than $750 and not more than $30,000 per act of infringement (that is, per sound recording downloaded or distributed without license) as you consider just.” The court further instructed: “If you find that the defendant's infringement of a copyrighted work was willful, the Copyright Act entitles a plaintiff to a sum of not less than $750 and not more than $150,000 per act of infringement (that is, per sound recording downloaded or distributed without license), as you consider just.” The court then instructed as to a set of non-exhaustive factors that the jury might wish to consider in issuing its award, including:

the nature of the infringement; the defendant's purpose and intent, the profit that the defendant reaped, if any, and/or the expense that the defendant saved; the revenue lost by the plaintiff as a result of the infringement; the value of the copyright; the duration of the infringement; [504] the defendant's continuation of infringement after notice or knowledge of copyright claims; and the need to deter this defendant and other potential infringers.Tenenbaum does not object to that portion of the instructions.

Tenenbaum argues that the statutory damage range should not have been disclosed to the jury and that the instructions presented the statutory damage range “unmoored from the overall statutory scheme and the context of other cases.” Tenenbaum proposes that instead the district court should only have instructed the jury to return an award the jury deemed “just” and then the court should have adjusted the award to fall within the statutory range after the jury made its determination. This argument is, of course, at considerable tension with Tenenbaum's argument that damages within the statutory range are unconstitutional.

The instruction given as to the statutory damage range was an accurate statement of the law and clearly informed the jury of the range of damages it could award under § 504(c). As such there was no error. See United States v. Mardirosian, 602 F.3d 1, 10 (1st Cir.2010) (upholding jury instructions because they “provided a clear, accurate description of the substantive law”).

It is commonplace for courts to explicitly instruct juries of the maximum and minimum statutory damage awards permitted under § 504(c). See, e.g., In re Frye, No. 08–1055, 2008 WL 8444822, at *3 (B.A.P. 9th Cir. Aug. 19, 2008) (noting jury awarded the statutory maximum under § 504(c)); Yurman Design, Inc. v. PAJ, Inc., 93 F.Supp.2d 449, 462 (S.D.N.Y.2000) (noting plaintiff elected to seek statutory damages, “and the jury was provided instructions concerning such damages”), rev'd in part on other grounds, 262 F.3d 101 (2d Cir.2001). Several model federal jury instructions also explicitly enumerate the range of statutory damages under 504(c). See, e.g., 3B K. O'Malley, J. Grenig & W. Lee, Federal Jury Practice and Instructions—Civil § 160.93 (5th ed. 2011) (including within model the instruction that “plaintiff ... has elected to recover ‘statutory damages' instead of plaintiff's actual damages and profits” and that “[u]nder the Copyright Act, plaintiff ... is entitled to a sum of not less than $750 or more than $30,000 as you consider just”); Ninth Circuit Manual of Model Civil Jury Instructions § 17.25 (including within model the instruction that the “amount you may award as statutory damages is not less than $750, nor more than $30,000 for each work you conclude was infringed”); Holbrook & Harris, ABA Model Jury Instructions: Copyright, Trademark, and Trade Dress Litigation § 1.7.7 (2008) (same). Each set of model jury instructions also notes that the maximum statutory damage award under § 504(c) is increased if the defendant's copyright infringement is determined to be willful. Cf. Fraser v. Major League Soccer, L.L.C., 284 F.3d 47, 62 (1st Cir.2002) (noting that district court's instructions tracked ABA model jury instructions in rejecting objection to instructions).

There is no viable argument that the instruction violated Congressional intent. Where Congress has sought to prevent juries from knowing that their awards will be reduced to be within statutory caps, it has explicitly said so in the relevant statute. See, e.g., 42 U.S.C. § 1981a(c)(2) (providing that “the court shall not inform the jury of the limitations” on awards of damages in intentional employment discrimination cases under Title VII). There is no such prohibition here.

Tenenbaum nonetheless argues that because Congress initially enacted the statute on the understanding that judges, not juries, would award statutory damages, it [505] must be error to tell the jury what the limits are.^[18] He also argues that the Supreme Court “failed to provide any structure for guiding the jury's use of the wide power shifted to it” within its holding in Feltner that the Seventh Amendment entitles a defendant to have a jury determine the amount of § 504(c) damages. Feltner, however, raises no objection to a jury's being informed of the statutory range. In any case, this argument is simply a variant of Tenenbaum's claim that Feltner somehow renders § 504(c) inoperable, which we have already rejected.

Moreover, after Feltner, had Congress wished to prevent juries from being informed of the bottom and top ranges of permissible statutory damages, it easily could have done so. Instead, Congress amended the statute after Feltner to expand the range of damages, and did so without placing any limitation as to how courts should instruct juries in such cases. See Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, Pub. L. No. 106–160, 113 Stat. 1774.

The district court's instructions on the range of statutory damages were not erroneous, let alone prejudicial.

B. Tenenbaum's Remaining Challenges to the Jury Instructions

Tenenbaum raises a series of unpreserved additional objections to the jury instructions which we review for plain error.

1. The Unpreserved Challenge that the District Court Should Have First Determined then Instructed the Jury on the Court's Assessment of Constitutional Limits on the Award

Tenenbaum argues that the district court erred by only instructing the jury as to the statutory boundaries for the damages award and failing, sua sponte, to inform the jury of the constitutional boundaries for the award. Tenenbaum asked for no such instruction, and the argument is waived. Even had the argument not been waived, there was no error.

Inherent in his argument is the proposition that before a case goes to the jury, the trial court must make its own assessment of the constitutional limits on damages and so instruct the jury. That is exactly backwards. See St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66–67, 40 S.Ct. 71, 64 L.Ed. 139 (1919) (considering constitutional limits on statutory damage award after jury issued award). Tenenbaum's proposal itself could raise Seventh Amendment concerns about judicial usurpation of the jury's function. There was no error.

2. The Unpreserved Argument that the District Court Was Required to Instruct the Jury Not to Consider Injury Suffered by Other Recording Companies or Injuries Caused by Copyright Infringers Other Than Tenenbaum

The district court properly instructed the jury on Tenenbaum's conduct and the plaintiffs' harms the jury could consider in making its determination. It specifically listed the nature of Tenenbaum's infringement, Tenenbaum's purpose and intent, the “revenue lost by the plaintiff as a result of the infringement,” the duration of the infringement, and the defendant's continuation of infringement after learning of the copyright claims.

Tenenbaum argues that the district court sua sponte should have provided additional [506] instruction to focus the jury. Again, the argument is waived. Even were it not waived, the court did not err. Tenenbaum appears to be arguing that the jury also had to be told it could not consider damages resulting from the illegal downloading and distribution of copyrighted materials suffered by other recording companies besides the named plaintiffs or from other unrelated filesharing by others.^[19] This is a hypothetical concern, not a real one in this case.

Tenenbaum purports to rely on language in Philip Morris USA v. Williams, 549 U.S. 346, 357, 127 S.Ct. 1057, 166 L.Ed.2d 940 (2007), that where there is a significant risk that the jury might take into account harm caused to non-party victims by the defendant, “a court, upon request, must protect against that risk.” (Emphasis added). Tenenbaum made no such request to the trial court.^[20] Nor does he point to any authority that requires a court to provide a Philip Morris-type instruction sua sponte.

Philip Morris does not help him, in any event. There was not a substantial risk of the jury's going astray. The court's entirely correct instruction foreclosed that risk. The jury was never urged to consider damages (1) caused by other copyright infringers or (2) suffered by other recording companies. Indeed, in his closing argument, Tenenbaum's counsel made clear that “it's what Joel did that is here in issue and [the question is] what's appropriate in response to what Joel did,” and Sony's counsel likewise stated that applying damages for “what Joel did” was “exactly what we want you to do.” The court's jury instructions as a whole focused exclusively on Tenenbaum's actions and the resulting harm to the plaintiffs.

3. The Unpreserved Argument that the District Court Was Sua Sponte Required to Additionally Instruct that Statutory Damages Could Not Be Awarded Unless They Were Related to Actual Damages

The district court did instruct the jury to issue an award within the statutory range that it deemed to be just, and highlighted a number of factors it could use for guidance. Tenenbaum argues that the district court erred by failing, sua sponte, to add an additional instruction that as a matter of law statutory damages cannot be awarded unless reasonably related to actual damages.

[507] Tenenbaum's argument fails the first step of the plain error analysis. His proposed instruction itself would have been error. In § 504, Congress drew a plain distinction between actual and statutory damages, making it clear that the availability of statutory damages is not contingent on the demonstration of actual damages. See 17 U.S.C. § 504. Statutory damages are available even for “uninjurious and unprofitable invasions of copyright.” F.W. Woolworth Co., 344 U.S. at 233, 73 S.Ct. 222.

We join our sister circuits, who have rejected similar objections to jury instructions. See New Form, Inc. v. Tekila Films, Inc., 357 Fed.Appx. 10, 11–12 (9th Cir.2009) (“There is no required nexus between actual and statutory damages under 17 U.S.C. § 504(c).”); Superior Form Builders, Inc. v. Dan Chase Taxidermy Supply Co., 74 F.3d 488, 496–97 (4th Cir.1996); see also Lowry's Reports, Inc. v. Legg Mason, Inc., 302 F.Supp.2d 455, 460 (D.Md.2004) (rejecting argument that court should have instructed the jury “that the amount of statutory damages should bear a reasonable relationship to actual damages”).

4. The Unpreserved Argument that the District Court Erred in Instructing the Jury that Finding Willful Infringement Under § 504 Only Requires a Finding that a Defendant Knowingly Infringed Copyrighted Materials

Finally, Tenenbaum challenges the district court's instruction that “willful infringement” “means that a defendant had knowledge that his actions constituted copyright infringement or acted with reckless disregard for the copyright holder's rights.” The argument is wrong and is based on a misreading of the statute.

Tenenbaum argues that, as used in § 504, a “willful infringement” must require more than a showing that the defendant had knowledge his actions constituted copyright infringement. He argues this must be so because non-willful infringement itself requires the defendant to have had such knowledge. As a result, merely requiring that an infringement be “knowing” to be “willful” would eliminate the distinction between non-willful and willful infringements that Congress sought to create in enacting § 504.

Tenenbaum's argument rests on the false premise that knowledge is an element of non-willful copyright infringement under the Copyright Act. To the contrary, the Act contains no requirement that a particular violation of copyright be knowing to constitute a non-willful infringement.^[21] See 17 U.S.C. § 501; see also Fitzgerald Publ'g Co. v. Baylor Publ'g Co., 807 F.2d 1110, 1113 (2d Cir.1986) (“Under § 501(a) intent or knowledge is not an element of infringement.”).

We join our sister circuits who have unanimously and routinely found that an infringement is willful under § 504 if it is “knowing.” See, e.g., [508] Bridgeport Music, Inc. v. UMG Recordings, Inc., 585 F.3d 267, 278 (6th Cir.2009) (rejecting challenge to jury instruction that, under § 504(c), “[a]n infringement is willful when a defendant engaged in acts that infringed a copyright and knew that those actions may infringe the copyright”) (alteration in original); Zomba Enters., Inc. v. Panorama Records, Inc., 491 F.3d 574, 584 (6th Cir.2007); Lyons P'ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 799–800 (4th Cir.2001). Cf. Yurman Design, Inc., 262 F.3d at 111 (finding plaintiff is “not required to show that the defendant had knowledge that its actions constitute[d] an infringement” for infringement to be willful under § 504(c) so long as defendant recklessly disregarded the risk of infringement) (citation omitted) (internal quotation marks omitted).

The district court correctly instructed the jury. There was no error as to the finding of liability against Tenenbaum.

After handling the trial with great skill, the district court committed reversible error when, after the jury awarded statutory damages, it bypassed the issue of common law remittitur, and instead resolved a disputed question of whether the jury's award of $22,500 per infringement violated due process, and decided itself to reduce the award. The court declined to adhere to the doctrine of constitutional avoidance on the ground that it felt resolution of a constitutional due process question was inevitable in the case before it. A decision on a constitutional due process question was not necessary, was not inevitable, had considerable impermissible consequences, and contravened the rule of constitutional avoidance. That rule had more than its usual import in this case because there were a number of difficult constitutional issues which should have been avoided but were engaged.

Facing the constitutional question of whether the award violated due process was not inevitable. The district court should first have considered the non-constitutional issue of remittitur, which may have obviated any constitutional due process issue and attendant issues. Had the court ordered remittitur of a particular amount, Sony would have then had a choice. It could have accepted the reduced award. Or, it could have rejected the remittitur, in which case a new trial would have ensued. See 11 Wright, Miller & Kane, Federal Practice and Procedure § 2815, at 160 (2d ed. 1995).

In reaching and deciding that due process constitutional question, the district court also unnecessarily decided several related constitutional issues. The court determined that the statutory damage award was effectively a punitive damage award for due process purposes and applied the factors set forth in BMW v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), to assess its constitutionality. The court declined to apply the Williams standard the Supreme Court had previously applied to statutory damage awards. See Tenenbaum, 721 F.Supp.2d at 103. The district court's tack also led to unnecessary resolution of Seventh Amendment issues. The decision to reduce the jury's award without offering Sony a new trial implicitly presupposed that, in reducing a statutory damage award issued by a jury, a court need not offer plaintiffs the option of a new jury trial in order to comport with the Seventh Amendment.

The United States, concerned with defending the constitutionality of the Copyright Act and its statutory damage provision, [509] argues that the district court erred by unnecessarily reaching Tenenbaum's constitutional challenge to the award and bypassing the question of common law remittitur.^[22] The United States alternatively argues that, if the due process issue were reached, the district court was required to apply the Williams due process standard. The United States points out an inferior federal court may not displace the Supreme Court's on point holding. The United States also raises Seventh Amendment concerns.

We agree with the position of the United States that the district court erred when it prematurely reached a constitutional question of whether the jury's award was excessive so as to violate due process. We reverse the reduction of the award, reinstate the original jury verdict and award, and remand for consideration of the common law remittitur question.

A. District Court Damages Proceedings

We provide a more detailed review of the relevant district court proceedings.

After the jury verdict awarding Sony $22,500 per infringement, Tenenbaum filed a motion for a new trial or remittitur pursuant to Federal Rule of Civil Procedure 59. Absent a grant of a new trial, he sought remittitur to the statutory minimum. Tenenbaum argued the court should use the standard that remittitur is appropriate where the result of the award is “grossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.” Correa v. Hosp. S.F., 69 F.3d 1184, 1197 (1st Cir.1995) (quoting Segal v. Gilbert Color Sys., Inc., 746 F.2d 78, 81 (1st Cir.1984)) (internal quotation marks omitted). Tenenbaum separately argued the award was unconstitutionally excessive under the standard for reviewing punitive damage awards articulated in Gore.

Sony opposed, arguing there was no factual basis for a remittitur given both the evidence and that the evidence had to be taken in the light most favorable to the prevailing party. See E. Mountain Platform Tennis, Inc. v. Sherwin–Williams Co., 40 F.3d 492, 502 (1st Cir.1994). It also argued that the district court lacked authority to displace a jury verdict which was in the statutory range set by Congress and that to hold otherwise would violate the Seventh Amendment. With regard to Tenenbaum's due process arguments, Sony argued that Williams set forth the proper standard, and not Gore. Sony also argued that under either the Williams or Gore standards, the award was not unconstitutionally excessive.

The United States took a different approach. It took no position on whether Tenenbaum had met the standard for remittitur (or a new trial). Rather, the United States stated that the canon of constitutional avoidance required the district court to first consider the question of common law remittitur, regardless of whether the award merited remittitur or not. If the court did address the constitutional question, the United States argued that the standard set forth in Williams was appropriate [510] and that the court should reject the Gore guideposts for assessing punitive damages because punitive damages are a distinct remedy from statutory damages. The United States also took the position that an award within the Copyright Act's statutory damage range comported with due process.

At the hearing on Tenenbaum's motion, the court asked counsel for plaintiffs to hypothesize as to what his clients' position would be if the court were to order a reduction or remittitur of the award. Understandably, plaintiffs' counsel did not take a firm position; he said his clients would have to consider the amount and other factors but thought it unlikely such a remittitur would be acceptable. If there were a remittitur, then, he said, the court could not reach the due process question of an excessive award because to do so would deprive plaintiffs of their Seventh Amendment right to a jury trial. Plaintiffs also argued that on the evidence, there was no basis for remittitur.

At that hearing, the United States repeated its position that the court was required to decide the remittitur question first in order to avoid any constitutional issues and that if plaintiffs rejected remittitur, the remedy was a new trial; the court could not go on to decide a constitutional due process issue as to the award. If the court did decide a constitutional due process issue as to the excessiveness of the award, the government argued, it was required to apply Williams, which had not been overruled.

Rejecting the position of the United States, the court bypassed remittitur, reached a constitutional due process issue, and ruled the award excessive under Gore. It reduced the award from $675,000 to $67,500 and did not give plaintiffs the option of a new trial.

The court stated its reason for bypassing the decision on common law remittitur. It treated plaintiffs' statements at the hearing as foreclosing any possibility of plaintiffs accepting remittitur, regardless of what amount the court might set for the award and despite plaintiffs' stated and careful reservations on the point. See Tenenbaum, 721 F.Supp.2d at 88. From this, the court reasoned that a new trial was inevitable; it then assumed that a jury would inevitably award a damages sum which would lead Tenenbaum to again raise a constitutional excessiveness challenge, and that the court which heard the new trial would then have to consider those and other objections again.^[23] Id. From these assumptions, the court reasoned it might as well decide those issues then and there.^[24] Id.

B. The District Court Erred by Unnecessarily Reaching and Deciding the Question of Whether the Jury's Award Was Unconstitutionally Excessive

The principle of constitutional avoidance, rooted in Article III as well as in principles of judicial restraint, and in this case implicating the Due Process Clause and [511] the Seventh Amendment right to jury trial, governs both this court and the district court and requires that we vacate and remand.

It is bedrock that the “long-standing principle of judicial restraint requires that courts avoid reaching constitutional questions in advance of the necessity of deciding them.” Lyng v. Nw. Indian Cemetery Protective Ass'n, 485 U.S. 439, 445, 108 S.Ct. 1319, 99 L.Ed.2d 534 (1988); see also Camreta v. Greene, ––– U.S. ––––, 131 S.Ct. 2020, 2031, 179 L.Ed.2d 1118 (2011) (noting rule that courts must avoid resolving constitutional questions unnecessarily). “[P]rior to reaching any constitutional questions, federal courts must consider nonconstitutional grounds for decision.” Buchanan v. Maine, 469 F.3d 158, 172 (1st Cir.2006) (quoting Gulf Oil Co. v. Bernard, 452 U.S. 89, 99, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981)) (internal quotation marks omitted). No valid reason justified abandonment of this doctrine in this case. The abandonment of the rule instead thrust the case into a thicket of constitutional issues it was not necessary to enter.

It was not necessary for the district court to reach the constitutional question of whether the jury's award of $22,500 per infringement was so excessive as to violate due process. If the district court had ordered remittitur, there would have been a number of possible outcomes that would have eliminated the constitutional due process issue altogether, or at the very least materially reshaped that issue.

The issue of whether the award violated due process and the Seventh Amendment issue would both have been eliminated if remittitur had been ordered and Sony had accepted the remitted award. Alternatively, if remittitur had been ordered but Sony had declined the remitted award, a new trial would have ensued. The jury could have issued an award that would not have led Tenenbaum to again seek a reduction on either common law remittitur or due process grounds.

Even if Sony had declined any remitted award given and opted for a new trial, even if a different jury issued a comparable award, and even if Tenenbaum once again moved to reduce the award on constitutional grounds, it was still premature for the court to reach the constitutional question before that process had been carried out. A new trial could have materially reshaped the nature of the constitutional issue by altering the amount of the award at issue or even the evidence on which to evaluate whether a particular award was excessive.

In this way, reaching the constitutional question before ordering remittitur not only contravened the doctrine of constitutional avoidance, it also led the court to address questions that had not yet been fully developed. Federal courts do not answer such hypothetical questions. See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 241, 57 S.Ct. 461, 81 L.Ed. 617 (1937) (Under Article III, judicial power is constrained to “real and substantial controvers[ies] admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts”); see also Bisbal–Ramos v. City of Mayaguez, 467 F.3d 16, 27 (1st Cir.2006) (vacating district court's reduction of compensatory damages, remanding so that court may issue remittitur, and refusing to address constitutionality of punitive damage award because, upon remand, plaintiff might opt for a new trial and “it would be premature ... to approve a punitive damages award based on the compensatory award from the first trial”).

[512] The path the court chose unnecessarily embroiled it in several issues of a constitutional dimension. The first was whether the due process standard for statutory damage awards articulated by the Supreme Court in Williams was applicable. The next was whether, if there was leeway and reason to bypass the Williams standard, the Gore standard, some combination of Williams and Gore, or some other standard should be used to evaluate whether the statutory damage award violated due process. We briefly describe the two due process standards to demonstrate the nature of the question to be avoided.

In Williams, the Supreme Court considered a challenge to an Arkansas statute that subjected railroads to penalties of “not less than fifty dollars, nor more than three hundred dollars and costs of suit,” for each offense of charging passengers fares that exceeded legal limits. See Williams, 251 U.S. at 64, 40 S.Ct. 71 (quoting Act April 4, 1887 (Laws 1887, p. 227; Kirby's Digest, 1904, § 6620); Act March 4, 1915 (Laws 1915, p. 365; Kirby & Castle's Digest, 1916, § 8094)) (internal quotation marks omitted). After the St. Louis, I.M. & S. Railroad collected a fare from two passengers of 66 cents more than the law allowed, the passengers brought suit pursuant to the statute. Id. at 63, 40 S.Ct. 71. Each passenger obtained a judgment of 75 dollars plus fees—an award, like the jury's award at issue here, well within the statutory range. Id. The railroad challenged the statutory award as unconstitutionally excessive under the Due Process Clause. Id.

The Court acknowledged that the Due Process Clause “places a limitation upon the power of the states to prescribe penalties for violations of their laws,” but noted that “States still possess a wide latitude of discretion in the matter.” Id. at 66, 40 S.Ct. 71. This is so, the court reasoned, because “the power of the State to impose fines and penalties for a violation of its statutory requirements is coeval with government; and the mode in which they shall be enforced, whether at the suit of a private party, or at the suit of the public, and what disposition shall be made of the amounts collected, are merely matters of legislative discretion.” Id. (quoting Mo. Pac. Ry. Co. v. Humes, 115 U.S. 512, 523, 6 S.Ct. 110, 29 L.Ed. 463 (1885)) (internal quotation marks omitted).

Given the latitude conferred upon legislatures to impose statutory penalties, the Court rejected the railroad's due process argument. The Court articulated that a statutory damage award violates due process only “where the penalty prescribed is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.” Id. at 66–67, 40 S.Ct. 71.

Gore and its progeny address the related but distinct issue of when a jury's punitive damage award is so excessive as to violate due process. See Gore, 517 U.S. at 574, 116 S.Ct. 1589. The Court, animated by the principle that due process requires that civil defendants receive fair notice of the severity of the penalties their conduct might subject them to, id., identified three factors to guide a court's consideration of whether a punitive damage award is so excessive as to deprive a defendant of due process: (1) the degree of reprehensibility of the defendant's conduct, id. at 575–80, 116 S.Ct. 1589, (2) the ratio of the punitive award to the actual or potential harm suffered by the plaintiff, id. at 580–83, 116 S.Ct. 1589, and (3) the disparity between the punitive award issued by the jury and the civil or criminal penalties authorized in comparable cases, id. at 583–85, 116 S.Ct. 1589.

In Copyright Act award cases, there are many questions regarding the relationship [513] between Gore's guideposts for reviewing punitive damage awards and the Williams standard for reviewing statutory damage awards. One is the relationship between the purposes of statutory damages under the Copyright Act as opposed to the purpose of punitive damages. Another concerns the limits or contours of possible ranges of awards under the different standards. Further, both Williams and Gore concerned limitations on state-authorized awards of damages, and did not concern Congressionally set awards of damages, which Congress is authorized to do under its Article I powers. This fact in turn raises concerns about intrusion into Congress's power under Article 1, Section 8 of the Constitution.

We note that in Gore, the Supreme Court did not overrule Williams. See Rivers v. Roadway Express, Inc., 511 U.S. 298, 312, 114 S.Ct. 1510, 128 L.Ed.2d 274 (1994) (hierarchical relationship of Supreme Court to lower courts mandates that where “the Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law”). Nor has the Supreme Court to date suggested that the Gore guideposts should extend to constitutional review of statutory damage awards. The concerns regarding fair notice to the parties of the range of possible punitive damage awards present in Gore are simply not present in a statutory damages case where the statute itself provides notice of the scope of the potential award. And the only circuit court of which we are aware to directly address the issue declined to apply Gore in this context and instead applied the Williams test. See Zomba Enters., Inc. v. Panorama Records, Inc., 491 F.3d 574, 587 (6th Cir.2007). Cf. Parker v. Time Warner Entm't Co., 331 F.3d 13, 22 (2d Cir.2003) (suggesting, in dicta, that Gore might govern due process review of statutory damage awards).

Had the district court ordered remittitur and not reached the constitutional question, it would not have needed to consider these issues or determine the relevant standard for assessing the constitutionality of a Copyright Act statutory damage award.

A decision based on remittitur, under which a new trial must be granted if plaintiffs do not accept the remitted award, also would have avoided another complicated constitutional question, which we describe briefly.

That issue arises under the Seventh Amendment, and is whether a statutory damage award under the Copyright Act may be reduced without offering the plaintiffs a new trial.^[25] Neither this court nor the Supreme Court has directly addressed the issue, but the Court's Feltner decision must be taken into account.

The usual rule for a general damage award is that a court may not reduce a jury's verdict and effectively impose a remittitur without affording a plaintiff “the option of a new trial when it enter[s] judgment for the reduced damages.” Hetzel v. Prince William Cnty., 523 U.S. 208, 211, 118 S.Ct. 1210, 140 L.Ed.2d 336 (1998); see also Dimick v. Schiedt, 293 U.S. 474, 486–87, 55 S.Ct. 296, 79 L.Ed. 603 (1935) (affirming remittitur power of courts but noting that where a verdict is set aside, the parties retain their right to have a jury determine the measure of damages); Kennon v. Gilmer, 131 U.S. 22, 29, 9 S.Ct. 696, 33 L.Ed. 110 (1889) (finding that under the [514] Seventh Amendment a court has no authority to reexamine facts determined by a jury, or to enter “according to its own estimate of the amount of damages which the plaintiff ought to have recovered ... an absolute judgment for any other sum than that assessed by the jury”). Citing Hetzel, we have held a trial court's reduction in compensatory damages must, to avoid Seventh Amendment error, allow the plaintiff a new trial. Bisbal–Ramos, 467 F.3d at 26 (reversing and remanding for consideration of remittitur where trial court had reduced compensatory damages without offering plaintiffs new trial).

By contrast, there is law indicating that a punitive damage award may be reduced on due process grounds (without offering plaintiffs a new trial) without running afoul of the Seventh Amendment. The Supreme Court's punitive damages jurisprudence suggests as much, but the question has not been directly addressed by the Court. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003) (finding punitive damage award violated due process); Gore, 517 U.S. 559, 116 S.Ct. 1589 (same). Some circuits, including our own, have found that “a court may reduce an excessive award of punitive damages without giving the plaintiff the option of a new trial.” Bisbal–Ramos, 467 F.3d at 27 (collecting cases); see also Mendez–Matos v. Municipality of Guaynabo, 557 F.3d 36, 52 (1st Cir.2009) ( “If we find an award ‘grossly excessive,’ we may ascertain the amount of punitive award that is appropriate and order the district court to enter judgment in such amount.”). But neither Bisbal–Ramos nor Mendez–Matos decided the question as to a statutory damages award.^[26]

In bypassing remittitur and reducing the jury's award without offering Sony a new trial, the district court assumed that statutory damage awards should be treated largely as punitive, not compensatory, awards for Seventh Amendment purposes. But statutory damages, unlike punitive damages, have both a compensatory and punitive element. See 17 U.S.C. § 504(c); Feltner, 523 U.S. at 352, 118 S.Ct. 1279 (“[A]n award of statutory damages [under § 504(c) ] may serve purposes traditionally associated with legal relief, such as compensation and punishment.”); F.W. Woolworth Co., 344 U.S. at 233, 73 S.Ct. 222 (“The statutory rule, formulated after long experience, not merely compels restitution of profit and reparation for injury but also is designed to discourage wrongful conduct.”).

Further, the Supreme Court's analysis of a different Seventh Amendment issue in Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 437, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001) suggests that punitive damage awards do not implicate the Seventh Amendment for reasons that do not apply to statutory damage awards. In Cooper, the Court observed that the Seventh Amendment provides only that “no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law,” U.S. Const. amend. VII (emphasis added), and reasoned that “the level of punitive damages is not really a ‘fact’ ‘tried’ by the jury,” Cooper Indus., 532 U.S. at 437, 121 S.Ct. 1678 (quoting Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 459, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) (Scalia, J., dissenting)) (internal quotation mark omitted). But statutory damage awards are different. In Feltner, [515] the Supreme Court determined that “the Seventh Amendment provides a right to a jury trial on all issues pertinent to an award of statutory damages under § 504(c) of the Copyright Act, including the amount itself.” Feltner, 523 U.S. at 355, 118 S.Ct. 1279.

The point here is not for us to decide these issues, but merely to describe them to show the importance of adherence to the doctrine of constitutional avoidance. The courts of appeals are likewise bound by that doctrine, and we are required to apply it here.^[27]

This was a difficult and contentious case and the parties received a fair trial from an admirably patient and able district judge.

We affirm the finding of liability against Tenenbaum and in favor of plaintiffs. We affirm the injunctive relief. We have, inter alia, rejected Tenenbaum's arguments that the Copyright Act is unconstitutional under Feltner, 523 U.S. 340, 118 S.Ct. 1279, that the Act exempts so-called “consumer copying” infringement from liability and damages, that statutory damages under the Act are unavailable without a showing of actual harm, that the jury's instructions were in error, and his various trial error claims.

We vacate the district court's due process damages ruling and reverse the reduction of the jury's statutory damages award. We reinstate the jury's award of damages and remand for consideration of defendant's motion for common law remittitur based on excessiveness.^[28]

If, on remand, the court allows any reduction through remittitur, then plaintiffs must be given the choice of a new trial or acceptance of remittitur.

So ordered.

Costs are awarded to plaintiffs.

[1] Tenenbaum argued that the statutory damages available under 17 U.S.C. § 504(c) are excessive so as to violate due process, and that the Copyright Act effectively creates an unconstitutional delegation of prosecutorial functions by creating a private right of action to enforce copyright protections. The second argument is not made on appeal.

[2] He argued a new trial should be granted on the grounds that the court had erred in rejecting Tenenbaum's fair use defense; that the court erred in its evidentiary ruling to exclude portions of a November 2005 letter from Tenenbaum in which he offered to destroy any illegally downloaded files as part of settlement negotiations; that the court's jury instructions were improper, primarily because they informed the jury of the statutory range for damages; and that statutory damages should not be available to Sony because Sony never offered evidence that they suffered more than nominal damages.

[3] A representative of Universal Music Group testified, “If the suggestion is that we could somehow give these [recordings] to people and tell them, do with them what you will, we lose complete control over our assets, we cannot make money off those assets, and that defeats the whole purpose of our existence.”

[4] We are aware of only one other action against an individual that has proceeded to trial. See Capitol Records, Inc. v. Thomas–Rasset, No. 06–1497, 799 F.Supp.2d 999, 2011 WL 3211362 (D.Minn. July 22, 2011).

[5] MediaSentry, the third party firm that Sony retained to identify individuals engaged in the illegal downloading and distribution of copyrighted recordings, discovered the 1153 songs in Tenenbaum's Kazaa shared-directory on August 10, 2004. MediaSentry then downloaded portions of 1148 of the 1153 files and verified that the files were the actual songs identified in each file's title, and that Tenenbaum had actually made copyrighted materials available for unauthorized copying.

[6] Tenenbaum contacted Sony as a result of the letter. While there were some settlement discussions, the parties were unable to resolve the matter.

[7] After receiving this letter, Tenenbaum nonetheless took his laptop computer for repairs and had its operating system reinstalled and its hard drive reformatted. At trial, Tenenbaum maintained that he only had work done on the computer because “the thing wouldn't run,” and that he instructed the computer repairman not to tamper with the music files stored on his computer.

[8] It is also clear that Congress continues to intend that the Copyright Act be fully operational as to statutory damages after Feltner. Congress amended § 504(c) after the Supreme Court had decided Feltner. See Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, Pub. L. No. 106–160, 113 Stat. 1774 (amendment increasing the statutory damage boundaries). “Congress is presumed to be aware of ... [a] judicial interpretation of a statute and to adopt that interpretation if it re-enacts a statute without change.” Forest Grove Sch. Dist. v. T.A., 557 U.S. 230, 129 S.Ct. 2484, 2492, 174 L.Ed.2d 168 (2009) (quoting Lorillard v. Pons, 434 U.S. 575, 580, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978)).

[9] Although in the district court Tenenbaum raised the argument that the Copyright Act does not extend to consumer conduct as a reason why the jury's statutory damage award should be reduced, he did not present the argument, as he does here, as a basis to exempt his actions from liability altogether.

[10] In the criminal infringement context, Congress has extended liability to, inter alia, those who infringe “for purposes of commercial advantage or private financial gain.” 17 U.S.C. § 506. Congress has made it clear, however, that this designation applies even absent direct monetary profit. See 17 U.S.C. § 101. It has defined “financial gain” to include “receipt, or expectation of receipt, of anything of value, including the receipt of other copyrighted works.” Id.

Under the “fair use” exception, which is not available to Tenenbaum, what constitutes a commercial use has also been interpreted broadly. See A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1015 (9th Cir.2001) ( “Direct economic benefit is not required to demonstrate a commercial use. Rather, repeated and exploitative copying of copyrighted works, even if the copies are not offered for sale, may constitute a commercial use.”).

[11] Sound recordings constitute “works of authorship” that receive copyright protection. See17 U.S.C. § 102(a)(7).

Tenenbaum implies that digital media should be treated differently than conventional music recordings. However, 17 U.S.C. § 102(a) makes no such distinction, and in fact explicitly provides that copyright protection exists “in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” (Emphasis added).

[12] Tenenbaum does not claim on appeal that his conduct falls under the fair use doctrine.

[13] See Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 430 n. 11, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (declining to express an opinion on scope of 1971 Act's exceptions for noncommercial uses).

[14] To take the point further, although the AHRA created immunity for some unauthorized, noncommercial uses of copyrighted materials, Congress explicitly declined to extend immunity to individuals who use home computers to copy copyrighted materials. See 17 U.S.C. § 1001(3); see also Recording Indus. Ass'n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072, 1078 (9th Cir.1999) (“Under the plain meaning of the [AHRA's] definition of digital audio recording devices, computers (and their hard drives) are not digital audio recording devices because their ‘primary purpose’ is not to make digital audio copied recordings.”).

[15] Tenenbaum argues that the 1999 Amendment pre-dated the widespread use of peer-to-peer networking sites, and observes that the 1999 Digital Theft Deterrence Act was first introduced in May 1999, a full month before the launch of Napster's file sharing network. Again, the factual premise is wrong. The Act was not signed into law until December 1999, at which point Napster was itself operational.

Moreover, Congress had in 1997 already acknowledged the advent of “audio-compression” technologies that “permit[ ] infringers to transmit large volumes of CD-quality music over the internet” in enacting the No Electronic Theft Act, Pub. L. No. 105–147, 111 Stat. 2678. See H.R.Rep. No. 105–339, at 4 (1997), 1997 WL 664424, at *4.

[16] The statute at issue in L.A. Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 39 S.Ct. 194, 63 L.Ed. 499 (1919), contained the phrase “in lieu of actual damages.” By contrast, 17 U.S.C. § 504(c) provides that statutory damages are available “instead of actual damages and profits.” The point is the same.

[17] The statutory damage range was also set forth on the jury verdict form. “District courts have ‘considerable discretion about the formulation, nature, and scope of the issues' on a special verdict form.” Uphoff Figueroa v. Alejandro, 597 F.3d 423, 434 (1st Cir.2010) (quoting 9B Wright, Miller & Kane, Federal Practice and Procedure § 2506, at 119 (2d ed.1995)). Because we conclude that the district court did not err in instructing the jury of the statutory damage range under § 504(c), Tenenbaum's like challenge to the jury verdict form also fails.

[18] Citing psychological studies but not law, Tenenbaum argues that informing the jury of the statutory damage range was reasonably likely to have had an “anchoring effect” that erroneously skewed the jury's award determination.

[19] He argues that because Sony offered testimony regarding the harmful effects all filesharing, not just Tenenbaum's infringements, has had on the recording industry at large, and not only the named plaintiffs, the court was required to instruct the jury sua sponte to “consider only harms by the named defendant that flowed to the named plaintiffs.”

[20] Tenenbaum has twice waived this argument. First, we reject his assertion that he preserved it by offering the following proposed jury instructions: “While there may be evidence relating to other downloading and sharing, the only issue of infringement or fair use that is before you concerns these ... songs.... [Y]ou may only award damages, if any, as to those ... songs.” This did not inform the court that Tenenbaum sought an instruction regarding harm done by other infringers or suffered by other recording companies given that Tenenbaum engaged in other downloading and sharing beyond the thirty songs at issue. See Linn v. Andover Newton Theological Sch., Inc., 874 F.2d 1, 5 (1st Cir.1989) (“If there is a problem with the instructions, the judge must be told preciselywhat the problem is, and as importantly, what the attorney would consider a satisfactory cure.”)

Moreover, after the court gave the jury its instructions, Tenenbaum raised no objection on these grounds whatsoever. “[E]ven if the initial request is made in detail, the party who seeks but did not get the instruction must object again after the instructions are given but before the jury retires for deliberations.” Gray v. Genlyte Grp., Inc., 289 F.3d 128, 134 (1st Cir.2002).

[21] 17 U.S.C. § 504(c)(2)'s so-called “innocent infringement” provision does not lend support to Tenenbaum's theory that knowledge is an element for non-willful infringement under the Act. A defendant cannot prove that he or she qualifies for a reduction of damages under § 504(c)(2) merely by showing that he or she lacked knowledge that his or her actions constituted copyright infringement. Rather, a plaintiff may still recover the full measure of statutory damages available for non-willful infringement even against an unknowing infringer if the infringer had “ reason to believe that his or her acts constituted an infringement of copyright.” 17 U.S.C. § 504(c)(2) (emphasis added).

[22] On appeal, both Tenenbaum and Sony argue error, but neither challenges the district court's decision to bypass the question of common law remittitur. They instead focus on whether the court chose the correct due process standard to evaluate whether the award was so excessive as to violate the constitution. Tenenbaum argues the Gore factors provide the correct due process analysis and that even the reduced award violates due process under that standard. Sony argues that the Williams due process standard must apply, that under it the original award issued by the jury never violated due process, and that the district court erred in reducing the award.

[23] These reasons are based on assumptions, not facts. Sony could not have decided its course of action if remittitur were allowed unless it knew the amount. Further, if Sony chose a new trial on damages, no one knows what sum a new jury would award, or whether that award would be challenged as excessive.

[24] The district court also attempted to justify its decision to bypass remittitur by making certain rulings on the merits of the constitutional issue. For example, the district court reasoned that the “differences between the [Gore and Williams ] approaches are, in practice, minimal[,]” a disputed issue. Sony BMG Music Entm't v. Tenenbaum, 721 F.Supp.2d 85, 101 (D.Mass.2010).

[25] The Seventh Amendment provides that, “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.” U.S. Const. amend. VII.

[26] Additionally, some courts have suggested that even under Gore, a court must give plaintiff the option of a new trial when it reduces a punitive damages award on due process grounds. See S. Union Co. v. Irvin, 563 F.3d 788, 790 (9th Cir.2009); Lee v. Edwards, 101 F.3d 805, 813 (2d Cir.1996).

[27] Sony rather weakly asserts remittitur is not available where, as here, an award falls within a prescribed statutory range. We do not take as given the questionable proposition that in enacting the Copyright Act, Congress intended to eliminate the common law power of the courts to consider remittitur. Common law remittitur has roots deep in English and American jurisprudence. See Honda Motor Co. v. Oberg, 512 U.S. 415, 424–26, 114 S.Ct. 2331, 129 L.Ed.2d 336 (1994); Dimick v. Schiedt, 293 U.S. 474, 482–83, 55 S.Ct. 296, 79 L.Ed. 603 (1935) (citing Blunt v. Little,Fed.Cas. No. 1,578, 3 Mason 102 (1822) (Story, J.)). We see no reason to think Congress meant to override this aspect of the common law.

In the post-Feltner amendment of the Copyright Act, Congress said nothing evidencing an intent to eliminate remittitur. See Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, Pub. L. No. 106–1060, 113 Stat. 1774. Congress is presumed to legislate incorporating background principles of common law unless it indicates to the contrary. See Bd. of Trs. of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., ––– U.S. ––––, 131 S.Ct. 2188, 2196, 180 L.Ed.2d 1 (2011) (rejecting statutory interpretation that conflicts with “two centuries of patent law”); Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 109, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991) (“Congress is understood to legislate against a background of common-law adjudicatory principles.”). Further, the principle of remittitur is embodied in Federal Rule of Civil Procedure 59. Thus, the district court's decision not to consider remittitur as requested appears to be contrary to Congressional intent.

[28] If the district court determines that the jury's award does not merit common law remittitur, the court and the parties will have to address the relationship between the remittitur standard and the due process standard for statutory damage awards, should the issue continue to be raised.

886 F.2d 1545
58 USLW 2242, 1989 Copr.L.Dec. P 26,475,
12 U.S.P.Q.2d 1412

FRANK MUSIC CORP.; Robert Wright; George Forrest; Anne Lederer as Executrix of the Last Will of Charles Lederer; Luther Davis; Edwin Lester, Plaintiffs-Appellants-Cross-Appellees,
v.
METRO-GOLDWYN-MAYER INC., et al., Defendants-Appellees-Cross-Appellants.

Nos. 87-6257, 87-6321.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted May 4, 1989.
Decided Sept. 27, 1989.

[1547] David H. Kornblum, Los Angeles, Cal., for plaintiffs-appellants-cross-appellees.

Charles M. Stern, Wyman, Bautzer, Kuchel & Silbert, Los Angeles, Cal., for defendants-appellees-cross-appellants.

Appeal from the United States District Court for the Central District of California.

Before FLETCHER, BOOCHEVER and REINHARDT, Circuit Judges.

FLETCHER, Circuit Judge:

In Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505 (9th Cir. 1985) (Frank Music I), we affirmed the district court's holding that defendants infringed plaintiffs' copyright in the dramatico-musical play Kismet, but remanded for reconsideration of the amount of profits attributable to the infringement and for consideration of whether defendants Donn Arden and Metro-Goldwyn-Mayer, Inc. (MGM, Inc.) should be liable in addition to MGM Grand Hotel, Inc. (MGM Grand). On remand, the district court awarded plaintiffs $343,724 against MGM Grand, dismissed the action against MGM, Inc. and Arden, and awarded plaintiffs $115,000 in attorney's fees. Plaintiffs appeal and defendants cross-appeal. We affirm in part, reverse in part, and remand.

I. FACTS

The facts are fully set out in Frank Music I, 772 F.2d at 509-11. We reiterate only selectively. Plaintiffs are the copyright owners and authors of Kismet, a dramatico-musical work. MGM, Inc. under license produced a musical motion picture version of Kismet. Beginning April 26, 1974, MGM Grand presented a musical revue entitled Hallelujah Hollywood in the [1548] hotel's Ziegfeld Theatre. Hallelujah Hollywood was largely created by an employee of MGM Grand, Donn Arden,^[1] who also staged, produced and directed the show. The show comprised ten acts, four billed as "tributes" to MGM motion pictures. Act IV was entitled "Kismet", and was a tribute to the MGM movie of that name. It was based almost entirely on music from Kismet, and used characters and settings from that musical. Act IV "Kismet" was performed approximately 1700 times, until July 16, 1976, when, under pressure resulting from this litigation, MGM Grand substituted a new Act IV.

Plaintiffs filed suit, alleging copyright infringement, unfair competition, and breach of contract. In Frank Music I, we affirmed the district court's conclusion that the use of Kismet in Hallelujah Hollywood was beyond the scope of MGM Grand's ASCAP license and infringed plaintiffs' copyright. In this appeal, the parties focus on the adequacy of damages and attorney's fees.

II. DISCUSSION

A. Apportionment of Profits

1. Direct Profits

In Frank Music I, 772 F.2d at 514, we upheld the district court's conclusion that the plaintiffs failed to prove actual damages arising from the infringement, but vacated the district court's award of $22,000 in apportioned profits as "grossly inadequate," id. at 518, and remanded to the district court for reconsideration.

On remand, the district court calculated MGM Grand's net profit from Hallelujah Hollywood at $6,131,606, by deducting from its gross revenues the direct costs MGM Grand proved it had incurred. Neither party challenges this calculation.

In apportioning the profits between Act IV and the other acts in the show, the district court made the following finding:

Act IV of "Hallelujah Hollywood" was one of ten acts, approximately a ten minute segment of a 100 minute revue. On this basis, the Court concludes that ten percent of the profits of "Hallelujah Hollywood" are attributable to Act IV.

Memorandum of Decision and Order (Decision II) at 4.

Plaintiffs assert that this finding is in error in several respects. First, they point out that on Saturdays Hallelujah Hollywood contained only eight acts, not ten, and that on Saturdays the show ran only 75 minutes, not 100. Frank Music I, 772 F.2d at 510. Second, Act IV was approximately eleven and a half minutes long, not ten. Id. Because the show was performed three times on Saturdays, and twice a night on the other evenings of the week, id., the district court substantially underestimated the running time of Act IV in relation to the rest of the show.^[2]

If the district court relied exclusively on a quantitative comparison and failed to consider the relative quality or drawing power of the show's various component parts, it erred. See ABKCO Music, Inc. v. Harrisongs Music, Ltd., 508 F.Supp. 798, 800 (S.D.N.Y. 1981), modified on other grounds, 722 F.2d 988 (2d Cir. 1983); Lottie Joplin Thomas Trust v. Crown Publishers, 456 F.Supp. 531, 538 (S.D.N.Y. 1977), aff'd, 592 F.2d 651 (2d Cir. 1978). However, the district court's apportionment based on comparative durations would be appropriate if the district court implicitly concluded that all the acts of the show were of roughly equal value. Cf. Frank Music I, 772 F.2d at 518 ("Each element contributed significantly to the show's success, but no one element was the sole or overriding reason for that success.") While a more precise statement of the district court's reasons [1549] would have been desirable, we find support in the record for the conclusion that all the acts in the show were of substantially equal value.

The district court went on to apportion the parties' relative contributions to Act IV itself:

The infringing musical material was only one of several elements contributing to the segment. A portion of the profits attributable to Act IV must be allocated to other elements, including the creative talent of the producer and director, the talents of performers, composers, choreographers, costume designers and others who participated in creating Act IV, and the attraction of the unique Ziegfeld Theatre with its elaborate stage effects. . . . While no precise mathematical formula can be applied, the Court concludes that . . . a fair approximation of the value of the infringing work to Act IV is twenty-five percent.

Decision II at 4-5.

The district court was correct in probing into the parties' relative contributions to Act IV. Where a defendant alters infringing material to suit its own unique purposes, those alterations and the creativity behind them should be taken into account in apportioning the profits of the infringing work. Cf. Sheldon v. Metro-Goldwyn Pictures Corp., 106 F.2d 45, 49-51 (2d Cir. 1939), aff'd, 309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825 (1940); see also Comment: An Improved Framework for Music Plagiarism Litigation, 76 Calif.L.Rev. 421, 454-55 (1988). However, the district court appears to have ignored its finding in its previous decision that defendants used not only the plaintiffs' music, but also their lyrics, characters, settings, and costume designs, recreating to a substantial extent the look and sound of the licensed movie version of Kismet. Memorandum of Decision and Order (Decision I) at 10-11.

While it was not inappropriate to consider the creativity of producers, performers and others involved in staging and adapting excerpts from Kismet for use in Hallelujah Hollywood, the district court erred in weighing these contributions so heavily. In performing the apportionment, the benefit of the doubt must always be given to the plaintiff, not the defendant. Sheldon, 106 F.2d at 51. And while the apportionment may take into account the role of uncopyrightable elements of a work in generating that work's profits, see Sheldon, 106 F.2d at 50-51 (considering role of movie's actors, scenery, producers and directors); cf. McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 320 (9th Cir. 1987) (substantial similarity analysis can include examination of uncopyrightable elements), the apportionment should not place too high a value on the defendants' staging of the work, at the expense of undervaluing the plaintiffs' more substantive creative contributions. See Comment: An Improved Framework, supra, at 454-56. Production contributions involving expensive costumes and lavish sets will largely be taken into account when deducting the defendants' costs. Indeed, defendants concede that had they produced Kismet in toto, it would have been proper for the district court to award 100% of their profits, despite their own creative efforts in staging such a production.

The district court found that defendants' staging of the Kismet excerpts was highly significant to Act IV's success. While we believe that a defendant's efforts in staging an infringing production will generally not support more than a de minimis deduction from the plaintiff's share of the profits, we cannot say the district court's conclusion that the defendants' contributions were substantial in this case is clearly erroneous. We recognize that there will be shows in which the attraction of the costumes, scenery or performers outweighs the attraction of the music or dialogue. On the other hand, a producer's ability to stage a lavish presentation, or a performer's ability to fill a hall from the drawing power of her name alone, is not a license to use freely the copyrighted works of others.

We conclude that apportioning 75% of Act IV to the defendants grossly undervalues the importance of the plaintiffs' contributions. Act IV was essentially Kismet, [1550] with contributions by the defendants; it was not essentially a new work incidentally plagiarizing elements of Kismet. A fairer apportionment, giving due regard to the district court's findings, attributes 75% of Act IV to elements taken from the plaintiffs and 25% to the defendants' contributions.^[3]

2. Indirect Profits

In Frank Music I, we held that the plaintiffs were entitled to recover, in addition to direct profits, a proportion of ascertainable indirect profits from defendants' hotel and gaming operations attributable to the promotional value of Hallelujah Hollywood. The district court considered the relative contributions of Hallelujah Hollywood and other factors contributing to the hotel's profits, including the hotel's guest accommodations, restaurants, cocktail lounges, star entertainment in the "Celebrity" room, the movie theater, Jai Alai, the casino itself, convention and banquet facilities, tennis courts, swimming pools, gym and sauna, and also the role of advertising and general promotional activities in bringing customers to the hotel. The district court concluded that two percent of MGM Grand's indirect profit was attributable to Hallelujah Hollywood. In light of the general promotion and the wide variety of attractions available at MGM Grand, this conclusion is not clearly erroneous.^[4]

B. Prejudgment Interest

The district court, without comment, declined to award prejudgment interest. The availability of prejudgment interest under the Copyright Act of 1909 is an issue of first impression in this circuit.

The 1909 Act does not mention prejudgment interest. Nevertheless, courts may allow prejudgment interest even though the governing statute is silent. Rodgers v. United States, 332 U.S. 371, 373, 68 S.Ct. 5, 7, 92 L.Ed. 3 (1947). "[A] persuasive consideration . . . is the relative equities between the beneficiaries of the obligation and those upon whom it has been imposed." Id. The goal of compensating the injured party fairly for the loss caused by the defendant's breach of the statutory obligation should be kept in mind. Id.; see also Loeffler v. Frank, 486 U.S. 549, 108 S.Ct. 1965, 1970-71, 100 L.Ed.2d 549 (1988). Prejudgment interest compensates the injured party for the loss of the use of money he would otherwise have had. General Motors Corp. v. Devex Corp., 461 U.S. 648, 655-56, 103 S.Ct. 2058, 2062-63, 76 L.Ed.2d 211 (1983); Handgards, Inc. v. Ethicon, Inc., 743 F.2d 1282, 1299-1300 (9th Cir. 1984).

Defendants argue that Congress did not intend for prejudgment interest to be available under the 1909 Act. They ask us to infer this from the inclusion of prejudgment interest in the Patent Act, 35 U.S.C. Sec. 284 (1982),^[5] and the omission of reference to prejudgment interest in either the 1909 Act or the Copyright Act of 1976. Because the Patent and Copyright Acts are similar statutes with similar purposes, defendants argue that differences between the two Acts with respect to prejudgment interest are intentional. Cf. Sony Corp. of America v. Universal City Studios, 464 U.S. 417, 435, 439, 104 S.Ct. 774, 787, 78 L.Ed.2d 574 (1984) (patent law appropriate source of guidance for novel copyright issues, but noting that doctrine of contributory infringement [1551] applies in copyright cases, where the statute is silent, as well as in patent cases, where the statute specifically refers to contributory infringers); Harris v. Emus Records Corp., 734 F.2d 1329, 1333 (9th Cir. 1984).

Examination of the history of prejudgment interest in the patent context suggests this argument is flawed. Before Congress enacted 35 U.S.C. Sec. 284, prejudgment interest was generally available in patent infringement cases from the date damages were liquidated, and in exceptional cases from the date of infringement. See, e.g., Duplate Corp. v. Triplex Safety Glass Co., 298 U.S. 448, 459, 56 S.Ct. 792, 797, 80 L.Ed. 1274 (1936); Tilghman v. Proctor, 125 U.S. 136, 160, 8 S.Ct. 894, 906, 31 L.Ed. 664 (1888). Such a remedy was available despite the fact that the patent laws then in effect made no mention of prejudgment interest.^[6] Indeed, the wording of the relevant patent statute was similar to that of Sec. 101(b) of the 1909 Copyright Act.^[7]

Thus, interpreting the 1909 Act in light of patent law doctrine existing at the time of its enactment and during much of its effective period, we cannot conclude that Congress intended from its silence that prejudgment interest would not be available under the 1909 Act.^[8] Just as courts awarded prejudgment interest in order to provide adequate compensation to patent holders before the enactment of 35 U.S.C. Sec. 284, this same remedy should be available to copyright owners for the same purpose. See also Fishman v. Estate of Wirtz, 807 F.2d 520, 584 (7th Cir. 1986) ("The denial of prejudgment interest systematically undercompensates victims and underdeters putative offenders.") (Easterbrook, dissenting).

We therefore hold that prejudgment interest is an available remedy under the 1909 Act. Whether the circumstances of this case warrant the remedy is a separate question. The common-law rule during much of the effective period of the 1909 Act awarded prejudgment interest only on [1552] damages that were liquidated or readily ascertainable by mathematical computations and did not rely on opinion or discretion. See, e.g., General Motors, 461 U.S. at 651-52 & n. 5, 103 S.Ct. at 2060-61 & n. 2 (discussing history of common law rule). But even where damages were not liquidated or readily ascertainable, courts had the power to award prejudgment interest on unliquidated damages when necessary to compensate the plaintiff fairly. Miller v. Robertson, 266 U.S. 243, 258, 45 S.Ct. 73, 79, 69 L.Ed. 265 (1924).

Because the 1909 Act allows plaintiffs to recover only the greater of the defendant's profits or the plaintiff's actual damages, see Frank Music I, 772 F.2d at 512; Sid & Marty Krofft Television Productions, Inc. v. McDonald's Corp., 562 F.2d 1157, 1176 (9th Cir. 1977), an award of profits or damages under the 1909 Act will not necessarily be adequate to compensate a prevailing copyright owner.^[9] Accordingly, we conclude prejudgment interest ordinarily should be awarded.

Awarding prejudgment interest on the apportioned share of defendant's profits is consistent with the purposes underlying the profits remedy. Profits are awarded to the plaintiff not only to compensate for the plaintiff's injury, but also and primarily to prevent the defendant from being unjustly enriched by its infringing use of the plaintiff's property. See Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390, 399, 60 S.Ct. 681, 684, 84 L.Ed. 825 (1940); D. Dobbs, Handbook on the Law of Remedies 1 (1973). For the restitutionary purpose of this remedy to be served fully, the defendant generally should be required to turn over to the plaintiff not only the profits made from the use of his property, but also the interest on these profits, which can well exceed the profits themselves. See D. Dobbs, supra, at 169-70; Fishman, 807 F.2d at 583-84 (giving examples of the effect of compound interest to demonstrate how "the time value of money works in defendants' favor.") (Easterbrook, dissenting). Indeed, one way to view this interest is as another form of indirect profit accruing from the infringement, which should be turned over to the copyright owner along with other forms of indirect profit. It would be anomalous to hold that a plaintiff can recover, for example, profits derived from the promotional use of its copyrighted material, but not for the value of the use of the revenue generated by the infringement.^[10]

We accordingly remand to the district court to enter an award of prejudgment interest.^[11] The award should be based on the fifty-two week Treasury bill rate, unless the district court concludes that the equities demand a different rate. See In re Bloom, 875 F.2d 224, 228 (9th Cir. 1989); [1553] Columbia Brick Works, Inc. v. Royal Ins. Co., 768 F.2d 1066, 1071 (9th Cir. 1985).^[12]

C. Liability of MGM, Inc.

In Frank Music I, we remanded to the district court to determine whether MGM, Inc., MGM Grand's parent corporation, should be liable for the infringement. We held that "[a] parent corporation cannot be held liable for the infringing actions of its subsidiary unless there is a substantial and continuing connection between the two with respect to the infringing acts." Frank Music I, 772 F.2d at 519-20.

The district court found that plaintiffs failed to establish such a substantial and continuing connection. According to the district court, the only evidence of a connection between MGM, Inc. and MGM Grand was MGM Grand's use of MGM Inc.'s studio facilities for planning the production prior to the opening of MGM Grand. The district court also noted, as a fact it believed favorable to MGM, Inc., that MGM Grand paid rent for the facilities and bore all the costs associated with the production of Hallelujah Hollywood.

The district court apparently did not consider several other important pieces of evidence. During the time of the infringing performances, MGM Grand was wholly owned by MGM, Inc. [R.T. 456] MGM, Inc.'s legal counsel responded to inquiries about the use of Kismet in Hallelujah Hollywood. [R.T. 488] Donn Arden's office was at MGM, Inc. [R.T. 209], and he was selected for the job with MGM Grand by a representative of MGM, Inc. [R.T. 217]. In addition to drawing patrons to the hotel and casino, Hallelujah Hollywood had another purpose: to promote MGM, Inc. and its "Leo the Lion" symbol. [R.T. 228, 242] Only material that had been used in MGM, Inc. films was used in the tribute segments of the show. [R.T. 359-60] Arden actively consulted with personnel from MGM, Inc. in preparing the show. [R.T. 232] MGM, Inc. made its movie version of Kismet available to Arden and Marvin Laird, who viewed it in a production room at MGM, Inc. [R.T. 243, 380] Arden and Laird got clearances for the material they wanted to use in Hallelujah Hollywood, including a clearance to use Kismet, from MGM, Inc. [R.T. 269, 271, 394] Laird, who worked on the music to Act IV, used material and was assisted by employees from MGM Inc.'s music library. [R.T. 301, 386]

The district court clearly erred in not finding that MGM, Inc. and MGM Grand had a substantial and continuing relationship with respect to the infringing activities. See Peter Pan Fabrics, Inc. v. Acadia Co., 173 F.Supp. 292, 298-99 (S.D.N.Y. 1959) (substantial and continuing connection between defendant and company which actually sold infringing fabric where, inter alia, both had same president, defendant owned 70% of the seller's stock and defendant responded to notice of infringement). Therefore, we conclude that MGM, Inc. is jointly and severally liable for the judgment against MGM Grand.

Plaintiffs also argue that MGM, Inc. should be liable additionally for an award of its own profits or, in lieu of such an award, for statutory damages. We disagree. Our conclusion that MGM, Inc. had a substantial and continuing relationship with MGM Grand with respect to the infringement permits us to treat the two corporate entities as the same for purposes of imposing an award of profits. Nevertheless, the downstream corporate benefits to MGM, Inc. from the infringement are simply too attenuated and too speculative to support a further award from an apportionment of its corporate profits. The question of whether specific profits were made from an infringement is similar to that of proximate cause in the tort context: just as there comes a point beyond which effects cannot legally be attributed to an initial tortious action, so too there comes a point beyond which an infringer's profits, from its enterprises as a whole, cannot legally be attributed to a particular act of infringement. The profits of a hotel may well, as here, have a sufficient nexus with an infringing performance in the hotel's showroom to justify attributing some percentage [1554] of the hotel's profits to the infringement.^[13] The profits of MGM, Inc. from its own interests and activities other than the MGM Grand lack such a nexus. Although MGM, Inc. may have reaped some marginal benefit from the infringement, for example from a slight increase in movie revenue as a result of the advertising value of the MGM Grand, or from a rise in stock value attributable in part to the success of the hotel, the percentage of such profits attributable to the infringing material in Act IV of Hallelujah Hollywood is too speculative and the relationship between such profits and the infringement too attenuated to justify the award of additional damages based on any profits received by MGM, Inc.

Plaintiffs argue that, if MGM, Inc.'s profits from the infringement are too speculative, MGM, Inc. must be liable for an award of statutory damages. See Frank Music I, 772 F.2d at 520; Russell v. Price, 612 F.2d 1123, 1130 (9th Cir. 1979) (statutory damages mandatory if neither profits nor damages can be ascertained). This presents a question we declined to reach in Frank Music I: whether an award of statutory damages is mandatory against an infringer whose profits are not ascertainable when the profits of another infringer are ascertainable. See Frank Music I, 772 F.2d at 520 n. 12. Generally, if either profits or actual damages can be ascertained, an award of statutory damages is discretionary, although the latter type of damages should be awarded if profits or actual damages would be inadequate. Krofft, 562 F.2d at 1178.^[14]

Statutory damages are available in order to effectuate two purposes underlying the remedial provisions of the Copyright Act: to provide adequate compensation to the copyright holder and to deter infringement. Frank Music I, 772 F.2d at 520; F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 232-33, 73 S.Ct. 222, 225, 97 L.Ed. 276 (1952). Where, as here, no actual damages have been proved and both defendants have been held jointly and severally liable for the profits earned by the primary infringer, we conclude the court should exercise its discretion to award statutory damages in lieu of profits only if they would exceed the profits for which the defendants are jointly liable. In that case, both the defendants should be held jointly and severally liable for the award of statutory damages. See MCA, Inc. v. Wilson, 677 F.2d 180, 187-88 (2d Cir. 1981). Here we find the award of an aliquot share of MGM Grand's profits plus prejudgment interest adequately compensates plaintiffs for their injuries. Thus, statutory damages are not appropriate in the case of either defendant. The rule we follow serves the purpose of compensation because the plaintiffs are assured an adequate recovery, and it serves the purpose of deterrence because each defendant is jointly and severally liable for the award. An award of mandatory statutory damages against MGM, Inc. effectively would grant [1555] plaintiffs a windfall.^[15]

D. Liability of Donn Arden

In Frank Music I, we held that Donn Arden could not be held jointly and severally liable for MGM Grand's profits unless he acted as a partner or practically a partner of MGM Grand, rather than as an employee or independent contractor. 772 F.2d at 519. On remand the district court concluded that Arden was an employee of MGM Grand, and that his entire involvement with Hallelujah Hollywood fell within the course and scope of his employment. This finding was not clearly erroneous.

In Frank Music I, we opined that if the district court concluded that Arden was an employee, he nonetheless could be held severally liable for any profits he himself earned in connection with Hallelujah Hollywood. Id. Amounts paid to Arden in salary, however, were not to be considered as profits. Id. Although the district court on remand failed to make a factual finding as to whether Arden earned royalties or other profits from Hallelujah Hollywood, the record is clear that Arden received only a weekly salary, and did not receive royalties based on the revenues or profits from the show. See MCA, 677 F.2d at 186.

Plaintiffs argue that if Arden is not liable for an award of profits, he should be subject to an award of statutory damages. Although statutory damages may be awarded against a defendant who is not jointly liable with other defendants where there would otherwise be no award against that defendant, such an award is not mandatory. In this case it would be inappropriate, because the plaintiffs have been awarded ample compensation from MGM Grand and MGM, Inc., and deterrence would not be furthered by imposing statutory damages against Arden.

Arden consulted MGM, Inc. as to whether he could use material from Kismet. He was assured he could. There is no evidence Arden knew or should have known MGM, Inc.'s assurance was incorrect. Whether his use of this material was permissible depended on the content and interpretation of contracts and license agreements within the knowledge of MGM, Inc. and MGM Grand. The error of those defendants in concluding that MGM Grand's ASCAP license permitted the use they and Arden made of Kismet was not Arden's fault and Arden received no benefit from the infringement.^[16] In these circumstances, no purpose would be served by sanctioning Arden by an award of statutory damages against him. Cf. Bradbury v. Columbia Broadcasting System, Inc., 287 F.2d 478, 485 (9th Cir. 1961); compare Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354, 365 (9th Cir. 1947) (greater blameworthiness where employee contributed material to infringing movie, knowing it to have been used previously in plaintiff's copyrighted movie).^[17]

E. Pendent Claims

In addition to their copyright claims, plaintiffs asserted pendent state law claims against MGM, Inc. for breach of contract and breach of the implied covenant of good [1556] faith and fair dealing. The district court, in its first decision, dismissed these claims based on its factual finding that MGM, Inc. had little or no involvement in the production of Hallelujah Hollywood. In Frank Music I, we considered plaintiffs' due process challenge to this dismissal.^[18] We concluded that the district court did not err in dismissing the plaintiffs' contract claims. Frank Music I, 772 F.2d at 521. At the same time, we remanded to the district court to determine whether there was a substantial and continuing connection between MGM, Inc. and MGM Grand, as a component of the plaintiffs' copyright claims. Id. at 520.

Our determination that a substantial and continuing connection exists between MGM, Inc. and MGM Grand in regard to the copyright infringement requires us to conclude that the plaintiffs' pendent claims should not have been dismissed on the ground of a lack of such a relationship.^[19] However, we nonetheless affirm the dismissal of the pendent claims. Any recovery available to plaintiffs under their contract and breach of implied covenant theories would either duplicate the profits awarded on their copyright infringement claim or, if based on actual damages, be precluded by our affirmance in Frank Music I of the district court's finding that plaintiffs failed to prove actual damages from the infringement. Frank Music I, 772 F.2d at 513.

F. Attorney's Fees

Both parties appeal from the district court's award of attorney's fees to the plaintiffs. The plaintiffs argue that the district court awarded them too small a fee. The defendants argue that the plaintiffs are not entitled to a fee at all, and even if they are, the fee awarded was too high.

The decision to award fees, and the amount of fees awarded, are both reviewed for abuse of discretion.^[20] Moore v. Jas. H. Matthews & Co., 682 F.2d 830, 838 (9th Cir. 1982); Russell v. Price, 612 F.2d 1123, 1132 (9th Cir. 1979). Plaintiffs in copyright actions may be awarded attorney's fees simply by virtue of prevailing in the action: no other precondition need be met, although the fee awarded must be reasonable. McCulloch v. Albert E. Price, Inc., 823 F.2d 316, 323 (9th Cir. 1987) ("fees are generally awarded to a prevailing plaintiff"); Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 684 F.2d 821, 832 (11th Cir. 1982); cf. Russell, 612 F.2d at 1132. The district court correctly noted that such awards to prevailing plaintiffs serve the purpose of encouraging private enforcement and deterring infringements. The district court did not abuse its discretion in determining that the plaintiffs are entitled to an award of attorney's fees.

We conclude, however, that the district court erred in failing to explain the basis for the amount awarded. Plaintiffs' counsel did not provide the district court with contemporaneous time records. His "reconstructed records" claim 1707.5 hours spent on this case from 1975 through mid-May 1980. This reconstruction is memorialized in an itemized list. In addition, he estimated that he expended another 3500 hours on the case from mid-May 1980 to the summer of 1987, listing the services performed during that period but not allocating his time among the various services. Counsel sought compensation at the rate of [1557] $250 per hour. Counsel's only explanation for his failure to keep track of seven years of his work was that he "got out of the habit of keeping time on the case."

The district court found that counsel expended much unwarranted time—as much as 300 hours of work where only a single hour was necessary. The court found the facts simple, but noted that complicated legal issues relating to damages were presented. As additional reasons for reducing the amount of the fees award, the court remarked that plaintiffs prevailed on only one of three claims, and that "both sides engendered numerous delays and petty discovery disputes, resulting in the inordinate length of time necessary to resolve this case." The court, "[i]n view of all these factors," concluded that a reasonable attorney's fee was $115,000. The district court made no specific findings either as to the number of hours reasonably spent or what was a reasonable hourly rate.

The trial court correctly refused to accept uncritically plaintiffs' counsel's representations concerning the time expended. Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378, 1385 (9th Cir. 1984). Plaintiffs bear the burden of showing the time spent and that it was reasonably necessary to the successful prosecution of their copyright claims. The lack of contemporaneous records does not justify an automatic reduction in the hours claimed, but such hours should be credited only if reasonable under the circumstances and supported by other evidence such as testimony or secondary documentation. Johnson v. University College, 706 F.2d 1205, 1207 (11th Cir. 1983). Time spent by plaintiffs' counsel responding to motions or actions by the defendants should not be excluded from the fee award. "[A]lthough [defendants] had the right to play hardball in contesting [plaintiffs'] claims, it is also appropriate that [defendants] bear the cost of their obstructionist strategy." Burgess v. Premier Corp., 727 F.2d 826, 841 (9th Cir. 1984). The district court blamed both sides for delays and petty discovery disputes, without differentiating those delays and disputes properly the fault of the plaintiffs from those properly the fault of the defendants. See Moore, 682 F.2d at 839 n. 10 (no reduction in fee where marginally useful work was necessary response to motions and defenses of the defendants).

In setting a reasonable attorney's fee, the district court should make specific findings of the rate and hours it has determined to be reasonable. Sealy, 743 F.2d at 1385. In Moore, the district court reduced counsels' fee request because, in the district court's opinion, they "were . . . inclined to produce a large volume of less than useful material." 682 F.2d at 837 (ellipsis in original). We reversed and remanded that award, holding that the district court abused its discretion by reducing counsels' claimed hours by half and allowing less than half their normal billing rate solely on the ground that some of their work was less than useful. Id. at 839. Plaintiffs' counsel's inadequate showing has invited substantial discounting of his fee. Still, he is entitled to a reasonable amount. Before determining the appropriate fee, the district court should make a more detailed analysis of the time records presented and a finding as to the reasonable hourly rate. See Sealy, 743 F.2d at 1385. We accordingly remand to the district court to reconsider its award and to substantiate whatever fee it awards. In its discretion, it can require the parties to supplement the record.

III. CONCLUSION

We vacate the damages award. We conclude that the proper apportionment entitles plaintiffs to 9% of the direct profits from Hallelujah Hollywood. We affirm the district court's finding as to the percentage of indirect profits attributable to Hallelujah Hollywood. We correct the award however for a mathematical error. Accordingly, plaintiffs are entitled to $551,844.54 as their share of direct profits and $699,963.10 as their share of indirect profits. We conclude that prejudgment interest should have been awarded, and remand for a calculation of the appropriate amount. We reverse the district court's finding that MGM, Inc. lacked a substantial and continuing [1558] connection with MGM Grand with respect to the infringement, and hold MGM, Inc. jointly and severally liable for the award of profits and prejudgment interest against MGM Grand. We affirm the district court's finding that Donn Arden is not jointly liable for the infringement, and decline to hold him severally liable for a separate award of profits or statutory damages. We affirm the district court's dismissal of plaintiffs' pendent claims. We vacate the award of attorney's fees so that the district court may make the necesary findings and recompute the amount to be awarded. We remand to the district court for further proceedings consistent with this opinion.

AFFIRMED in part, REVERSED in part, and REMANDED with directions.

[1] The basis for finding Donn Arden to be an employee of MGM Grand is discussed infra.

[2] There were twelve shows weekly which ran for 100 minutes, plus three on Saturdays which ran 75, totalling 1425 minutes per week. Act IV remained constant throughout the week, for a total of approximately 173 minutes. Accordingly, Act IV comprised 12% of the total weekly running time of Hallelujah Hollywood. Because the district court's findings differ from those previously found and affirmed in Frank Music I, we substitute 12% as the appropriate figure on which we base our subsequent calculations.

[3] Based on this allocation, plaintiffs are entitled to $551,844.54 as direct profits from the infringement.

[4] We do, however, need to correct an error in calculation or typography noted by the plaintiffs. In subtracting MGM Grand's direct profits of $6,131,606 from its total net profit of approximately $395,000,000, the district court arrived at the figure of $380,868,394. The correct figure is $388,868,394. Plaintiffs are entitled to 9% (75% of 12%) of 2% of this figure, or $699,963.10.

[5] 35 U.S.C. Sec. 284 provides:

Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court.

This section has been interpreted to require that prejudgment interest "ordinarily be awarded where necessary to afford the plaintiff full compensation for the infringement." General Motors, 461 U.S. at 654, 103 S.Ct. at 2062.

[6] Rev.Stat. Sec. 4921, as amended, 42 Stat. 392, 35 U.S.C. Sec. 70, provided in pertinent part:

[T]he complainant shall be entitled to recover, in addition to the profits to be accounted for by the defendant, the damages the complainant has sustained thereby.

40 Stat. 704-05, 28 U.S.C. Sec. 1498 (1982), provides for a remedy in cases of patent or copyright infringement by the United States. Section 1498 allows the prevailing plaintiff "recovery of his reasonable and entire compensation," which the Supreme Court construed in Waite v. United States, 282 U.S. 508, 509, 51 S.Ct. 227, 75 L.Ed. 494 (1931), to include prejudgment interest on the profits the plaintiff would have made but for the infringement.

[7] 17 U.S.C. Sec. 101(b) (1970) provides, in pertinent part:

[The copyright proprietor shall be entitled to recover] such damages as the copyright proprietor may have suffered due to the infringement, as well as all the profits which the infringer shall have made from such infringement. . . .

[8] Nor do we suggest that Congress's continuing silence on this issue in the 1976 Act necessarily should be interpreted as an express disavowal of prejudgment interest. "Ordinarily, 'Congress' silence is just that—silence.'" Community for Creative Non-Violence v. Reid, — U.S. —, 109 S.Ct. 2166, 2177, 104 L.Ed.2d 811 (1989), quoting Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 686, 107 S.Ct. 1476, 1481, 94 L.Ed.2d 661 (1987).

Only one circuit has considered the availability of prejudgment interest in a copyright infringement action, and that case construed the 1976 Act, not the 1909 Act. In Robert R. Jones Assocs. v. Nino Homes, 858 F.2d 274, 282 (6th Cir. 1988), the Sixth Circuit vacated the district court's decision to award prejudgment interest under the 1976 Act. Finding that the district court's purpose in granting prejudgment interest was "to provide an effective sanction against copyright infringement," id., the court held that such a remedy was unnecessary to deter infringements in light of the availability under the 1976 Act of an award of profits and damages, as well as costs and attorneys' fees. Id.; see 17 U.S.C. Secs. 504(b), 505 (1982).

The Sixth Circuit's decision is of limited utility in determining whether prejudgment interest should be allowed under the 1909 Act. Deterrence of infringement is not the only purpose of the copyright law: Congress also intended the damages provisions of the 1909 Act to provide adequate compensation to the copyright holder. F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 232-33, 73 S.Ct. 222, 225, 97 L.Ed. 276 (1952).

The Second Circuit has affirmed an award under the 1909 Act which included prejudgment interest without discussing the issue. Lottie Joplin Thomas Trust v. Crown Publishers, 592 F.2d 651, 656 (2d Cir. 1978). It does not appear that the propriety of that award was argued to the appellate court.

[9] Prior to 1946, the patent law, like the 1976 Copyright Act, allowed recovery of both profits and damages. Rev.Stat. Sec. 4921, as amended, 42 Stat. 392, 35 U.S.C. Sec. 70; Aro Mfg. Co. v. Convertible Top Replacement Co., 377 U.S. 476, 505, 84 S.Ct. 1526, 1542, 12 L.Ed.2d 457 (1964). In 1946 Congress eliminated recovery of the patent infringer's profits, while at the same time making it easier for a patent holder to recover prejudgment interest, in order to ensure the patent holder full compensation. See H.R.Rep. No. 1587, 79th Cong., 2d Sess., 1-2 (1946); S.Rep. No. 1503, 79th Cong., 2d Sess., 2 (1946), U.S.Code Cong.Serv. 1946, p. 1386; 92 Cong.Rec. 9188 (1946); see also General Motors, 461 U.S. at 654-55, 103 S.Ct. at 2061-62. Although congressional intent in enacting the 1946 amendment to the patent law cannot shed light on congressional intent in enacting the 1909 Copyright Act, the provision of generally available prejudgment interest as a quid pro quo for the unavailability of profits in the patent context suggests the suitability of making prejudgment interest generally available under the 1909 Act where the copyright holder is limited to recovering only profits or damages, but not both. We do not, however, mean to suggest that this analogy should be dispositive in determining whether and when prejudgment interest should be awarded under the 1976 Copyright Act, issues on which we express no opinion.

[10] Prejudgment interest will, of course, be available on both the direct and indirect profits earned by MGM Grand, since both forms of profit are equally attributable to the infringement. Frank Music I, 772 F.2d at 517.

[11] Plaintiffs requested prejudgment interest only from the date of the last infringing performance. This is an acceptable date from which to start the running of interest. We need not decide in this case whether an award of prejudgment interest from some earlier point in time, such as the first infringement or date of notice, would be appropriate.

[12] This is the same rate on which postjudgment interest is based. See 28 U.S.C. Sec. 1961 (1982).

[13] Thus, the result would be the same in this case even if the showroom where Hallelujah Hollywood was performed were a distinct corporate entity from the hotel as a whole, provided there was the requisite relationship between the two with respect to the infringement. See generally Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963) ("When the right and ability to supervise coalesce with an obvious and direct financial interest in the exploitation of copyrighted materials—even in the absence of knowledge [of the infringement]—the purposes of copyright law may be best effectuated by the imposition of liability upon the beneficiary of that exploitation." [Citations omitted]. Similarly, had MGM, Inc. received a more definite, ascertainable financial benefit from the infringement, beyond the profits received by its hotel subsidiary, an award reaching those profits would be entirely proper. Joint liability for profits among interrelated corporate defendants serves the purpose of giving a successful copyright plaintiff its due reward without subjecting that award to the vagaries of corporate structures which, in the context of the particular infringement, should in fairness be ignored.

[14] If statutory damages are awarded, the amount must be in excess of the provable profits or actual damages. Krofft, 562 F.2d at 1178. This rule is a logical corollary of this circuit's rule that under the 1909 Act a plaintiff is limited to recovering only the greater of the infringer's profits or actual damages, but not both.

[15] Our rationale would not preclude an award of statutory damages against a defendant whose profits are not ascertainable and who is not jointly liable for an award of actual damages, statutory damages awarded in lieu of actual damages, or a co-defendant's profits. Because such a defendant has presumably received a benefit from the infringement distinct from that of its co-defendants, an award of statutory damages in lieu of profits would not necessarily give plaintiffs a windfall. At the same time, the absence of joint liability means that the severally liable defendant's conduct would not generally be deterred absent an award of damages.

[16] Because part of Arden's task was to create tributes to MGM movies, he acted well within the expectations of his employer in creating Act IV with heavy reliance on material from Kismet. His situation is thus different from that of a hypothetical employee who eases the demands of his job by plagiarizing the work of others, and therefore could be deemed to have received a benefit from the infringement even if his only financial benefit was in the form of salary.

[17] An award in the amount of profits actually earned by the employee would be appropriate in any event. Such profits, received through the use of the plaintiff's copyrighted material, should properly be turned over to the copyright owner.

[18] Although the district court had indicated at the outset of trial that it would not exercise pendent jurisdiction over these claims, it subsequently reversed course and permitted plaintiffs to make an evidentiary showing in respect to their pendent claims during the period of post-trial briefing. Plaintiffs did not make a proffer of additional evidence at that time.

[19] Defendants argue that the law of the case should preclude us from reexamining this question. Although issues previously decided by the same court in the same case will not ordinarily be subject to reexamination, considerations of fundamental fairness may in an appropriate case dictate an exception to this rule. Moore v. Jas. H. Matthews & Co., 682 F.2d 830, 833-34 (9th Cir. 1982); White v. Murtha, 377 F.2d 428, 431-32 (5th Cir. 1967).

[20] 17 U.S.C. Sec. 116 (1909 Act) provides: "the court may award to the prevailing party a reasonable attorney's fee as part of the costs." 17 U.S.C. Sec. 505 (1976 Act) provides for attorney's fees in virtually identical language.

94 F.3d 553
65 USLW 2164, 1996 Copr.L.Dec. P 27,557,
39 U.S.P.Q.2d 1933,
96 Cal. Daily Op. Serv. 6324,
96 Daily Journal D.A.R. 10,385

FANTASY, INC., Plaintiff-Appellant, Cross-Appellee,
v.
John C. FOGERTY, Defendant-Appellee, Cross-Appellant.

Nos. 95-16040, 95-16138.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted July 10, 1996.
Decided Aug. 26, 1996.

[555] Albert M. Bendich and Paul N. Halvonik, Berkeley, California, for plaintiff-appellant-cross-appellee.

Kenneth I. Sidle, Gipson, Hoffman & Pancione, Los Angeles, California, for defendant-appellee-cross-appellant.

Appeals from the United States District Court for the Northern District of California, Samuel Conti, District Judge, Presiding. D.C. No. CV-85-04929-SC.

Before: WOOD, Jr.,^[*] CANBY, and RYMER, Circuit Judges.

RYMER, Circuit Judge:

This appeal requires us to consider the scope of a district court's discretion to award a reasonable attorney's fee to a prevailing defendant in a copyright infringement action, and in particular, to decide whether a court must find some "culpability" on the part of the plaintiff in pursuing the suit before it can award a fee to a prevailing defendant whose victory on the merits furthers the purposes of the Copyright Act.

John Fogerty, former lead singer and songwriter for "Creedence Clearwater Revival," recognized as one of the greatest American rock and roll bands, successfully defended a copyright infringement action in which Fantasy, Inc., alleged that Fogerty had copied the music from one of his earlier songs which Fantasy now owned, changed the lyrics, and released it as a new song. After concluding that Fogerty's victory on the merits vindicated his right (and the right of others) to continue composing music in the distinctive "Swamp Rock" style and genre and therefore furthered the purposes of the Copyright Act, the district court awarded Fogerty $1,347,519.15 in attorney's fees. Fantasy appeals the award mainly on the ground that the court had no discretion to award Fogerty any attorney's fees inasmuch as its conduct in bringing and maintaining the lawsuit was "faultless."

We hold that, after Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994), an award of attorney's fees to a prevailing defendant that furthers the underlying purposes of the Copyright Act is reposed in the sound discretion of the district courts, and that such discretion is not cabined by a requirement of culpability on the part of the losing party. As we agree with the district court that Fogerty's victory on the merits furthered the purposes of the Copyright Act, and as we cannot say that the district court abused its discretion by awarding fees under the circumstances of this case, we affirm the award. We also uphold the district court's exercise of discretion not to award interest on Fogerty's fee award.

I

This action began July 26, 1985, when Fantasy sued Fogerty for copyright infringement, [556] alleging that Fogerty's song "The Old Man Down the Road" infringed the copyright on another of his songs, "Run Through the Jungle," which Fantasy owned. About three years later, on November 7, 1988, the jury disagreed, returning a verdict in favor of Fogerty.

Fogerty moved for a reasonable attorney's fee pursuant to 17 U.S.C. § 505.^[1] The district court denied the request on the ground that Fantasy's lawsuit was neither frivolous nor prosecuted in bad faith and our then-existing precedent precluded an award of fees in the absence of one or the other. See Cooling Systems & Flexibles, Inc. v. Stuart Radiator, Inc., 777 F.2d 485, 493 (9th Cir. 1985). We affirmed for the same reason, Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1533 (9th Cir. 1993) [Fogerty I], but the Supreme Court reversed and remanded in Fogerty v. Fantasy, Inc., 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994) [Fogerty II]. We then remanded to the district court for further proceedings consistent with Fogerty II. Fantasy, Inc. v. Fogerty, 21 F.3d 354 (9th Cir. 1994) [Fogerty III].

On remand, the district court granted Fogerty's motion and, after reviewing extensive billing records, awarded $1,347,519.15. Its decision was based on several factors. First, Fogerty's vindication of his copyright in "The Old Man Down the Road" secured the public's access to an original work of authorship and paved the way for future original compositions — by Fogerty and others — in the same distinctive "Swamp Rock" style and genre. Thus, the district court reasoned, Fogerty's defense was the type of defense that furthers the purposes underlying the Copyright Act and therefore should be encouraged through a fee award. Further, the district court found that a fee award was appropriate to help restore to Fogerty some of the lost value of the copyright he was forced to defend. In addition, Fogerty was a defendant author and prevailed on the merits rather than on a technical defense, such as the statute of limitations, laches, or the copyright registration requirements. Finally, the benefit conferred by Fogerty's successful defense was not slight or insubstantial relative to the costs of litigation, nor would the fee award have too great a chilling effect or impose an inequitable burden on Fantasy, which was not an impecunious plaintiff.

Fogerty also sought interest to account for the lost use of the money paid to his lawyers over the years. While the district court awarded Fogerty almost all of what he asked for in fees, it declined to award interest. Fantasy timely appeals the fee award; Fogerty timely cross-appeals the refusal to award interest.

II

We review the district court's decision to award attorney's fees under the Copyright Act for an abuse of discretion, Maljack Productions v. GoodTimes Home Video Corp., 81 F.3d 881, 889 (9th Cir. 1996), but "any elements of legal analysis and statutory interpretation which figure in the district court's decision are reviewable de novo," Hall v. Bolger, 768 F.2d 1148, 1150 (9th Cir. 1985). "A district court's fee award does not constitute an abuse of discretion unless it is based on an inaccurate view of the law or a clearly erroneous finding of fact." Schwarz v. Secretary of Health & Human Serv., 73 F.3d 895, 900 (9th Cir. 1995) (internal quotations and citation omitted).

III

Fantasy contends that the district court had no discretion to award fees to Fogerty because Fantasy conducted a "good faith" and "faultless" lawsuit upon reasonable factual and legal grounds, or to put it somewhat differently, because Fantasy was "blameless." According to Fantasy, once the district court could find no fault in the way Fantasy conducted this case, that should have been the end of the matter. To award fees nevertheless, Fantasy contends, is incompatible with Fogerty II 's rule of evenhandedness, [557] as evenhandedness cannot be achieved by rewarding each side for qualities that adhere only to that side. To do so, as Fantasy contends the district court did here, is tantamount to the British Rule's automatic fee award to the victor — which Fogerty II rejected. Rather, it submits, the court's discretion may only be informed by factors having to do with culpability that are capable of being applied equally to prevailing plaintiffs and prevailing defendants.

Fogerty, on the other hand, contends that Fogerty II focuses a district court's discretion on whether the prevailing party has furthered the purposes of the Copyright Act in litigating the action to a successful conclusion; under that standard, the district court was well within its discretion in finding that his successful defense of this action served important copyright policies. He also argues that the evenhanded approach does not mean that only "neutral" factors may be considered in the exercise of the court's discretion since, contrary to Fantasy's view, the Court itself recognized that somewhat different policies of the Copyright Act may be furthered when either plaintiffs or defendants prevail. Fogerty points out that the Court specifically observed that his successful defense of this action "increased public exposure to a musical work that could, as a result, lead to further creative pieces," Fogerty II, 510 U.S. at 527, 114 S.Ct. at 1030, and maintains that the fact that this factor happened to tip in Fogerty's favor as a prevailing defendant in this case should not prevent it from being considered at all.

A

In Fogerty II, the Supreme Court granted certiorari to resolve a conflict among the circuits concerning "what standards should inform a court's decision to award attorney's fees to a prevailing defendant in a copyright infringement action. . . ." Id. at 519, 114 S.Ct. at 1026. The Court rejected both the "dual" standard that we had followed and applied in Fogerty I — whereby prevailing plaintiffs generally were awarded attorney's fees as a matter of course, while prevailing defendants had to show that the original lawsuit was frivolous or brought in bad faith — and the "British Rule" for which Fogerty argued — whereby the prevailing party (whether plaintiff or defendant) automatically receives fees. The Court instead adopted the "evenhanded" approach exemplified by the Third Circuit's opinion in Lieb v. Topstone Indus., Inc., 788 F.2d 151 (3d Cir. 1986).^[2] The Court held that

Prevailing plaintiffs and prevailing defendants are to be treated alike, but attorney's fees are to be awarded to prevailing parties only as a matter of the court's discretion. "There is no precise rule or formula for making these determinations," but instead equitable discretion should be exercised "in light of the considerations we have identified."

Fogerty II, 510 U.S. at 534, 114 S.Ct. at 1033 (quoting Hensley v. Eckerhart, 461 U.S. 424, 436-437, 103 S.Ct. 1933, 1941, 76 L.Ed.2d 40 (1983). Considerations discussed by the Court include the Copyright Act's primary objective, "to encourage the production of original literary, artistic, and musical expression for the good of the public," id. at 524, 114 S.Ct. at 1028; the fact that defendants as well as plaintiffs may hold copyrights, id. at 525-527, 114 S.Ct. at 1029, and "run the gamut from corporate behemoths to starving artists," id. at 524, 114 S.Ct. at 1028 (internal quotations and citation omitted); the need to encourage "defendants who seek to advance a variety of meritorious copyright defenses . . . to litigate them to the same extent that [558] plaintiffs are encouraged to litigate meritorious claims of infringement," id. at 527, 114 S.Ct. at 1030; and the fact that "a successful defense of a copyright infringement action may further the policies of the Copyright Act every bit as much as a successful prosecution of an infringement claim by the holder of a copyright," id.

The district court's decision was informed by these considerations, but Fantasy argues that it failed to appreciate the culpability underpinnings of the evenhanded rule and to apply the Lieb factors, which Fantasy contends are fault-based and were embraced by the Supreme Court in Fogerty II. However, neither Lieb nor the Court's discussion of the evenhanded rule and the Lieb factors in Fogerty II suggests that discretion to award fees to prevailing defendants is constrained by the plaintiff's culpability, or is limited to the specific factors identified in Lieb. As the Court's discussion in footnote 19 indicates, courts following the evenhanded standard have suggested several "nonexclusive factors to guide courts' discretion." Id. at 534 n. 19, 114 S.Ct. at 1033 n. 19. By way of example, footnote 19 refers to the factors listed by the Third Circuit in Lieb (frivolousness, motivation, objective unreasonableness, and considerations of compensation and deterrence),^[3] and says of them: "We agree that such factors may be used to guide courts' discretion, so long as such factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner." Id. Thus, while courts may take the Lieb factors into account, they are "nonexclusive." Even so, courts may not rely on the Lieb factors if they are not "faithful to the purposes of the Copyright Act." Id. Faithfulness to the purposes of the Copyright Act is, therefore, the pivotal criterion.

By the same token, a court's discretion may be influenced by the plaintiff's culpability in bringing or pursuing the action, but blameworthiness is not a prerequisite to awarding fees to a prevailing defendant. Fantasy made a similar argument in the Supreme Court, asserting that Congress must have intended attorney's fees for prevailing defendants only when the plaintiff's claim was frivolous or brought with a vexatious purpose because that was the clearly established law when § 505 was enacted. Id. at 527-529, 114 S.Ct. at 1030. The Court disagreed. In doing so, it singled out the statement in Breffort v. I Had a Ball Co., 271 F.Supp. 623 (S.D.N.Y. 1967), that "if an award is to be made at all [to a prevailing defendant], it represents a penalty imposed upon the plaintiff for institution of a baseless, frivolous, or unreasonable suit, or one instituted in bad faith," id. at 627, as "too narrow a view of the purposes of the Copyright Act because it fails to adequately consider the important role played by copyright defendants," Fogerty II, 510 U.S. at 532-533 n. 18, 114 S.Ct. at 1032 n. 18. In the face of this declaration, we cannot fault the district court for awarding fees to Fogerty as a prevailing defendant without first finding that Fantasy as the plaintiff was blameworthy.

Although we have not squarely addressed this question before, our post-Fogerty II opinions have recognized that a plaintiff's culpability is no longer required, that the Lieb factors may be considered but are not exclusive and need not all be met, and that attorney's fee awards to prevailing defendants are within the district court's discretion if they further the purposes of the Copyright Act and are evenhandedly applied. In Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435 (9th Cir. 1994), cert. denied, — U.S. —, 115 S.Ct. 1176, 130 L.Ed.2d 1129 (1995), for instance, we affirmed summary judgment for the defendants but remanded for the district court to reconsider its refusal to award attorney's fees in light of Fogerty II, explaining that "the district court now has greater discretion to award attorney's fees to prevailing defendants." Id. at 1448. We rejected the plaintiff's contention that "remand is unnecessary because the district court also made findings that require the denial of attorney's fees under the criteria set forth in Lieb," concluding that "[t]he district court clearly indicated that it might be inclined to award attorney's fees if a finding of bad faith or frivolousness were no longer required, and it invited [the defendants] to [559] renew their motions should the law in this circuit change." Id; see also Smith v. Jackson, 84 F.3d 1213, 1221 (9th Cir. 1996) (award upheld even though district court found no frivolousness but weighed many relevant considerations and didn't commit clear error of judgment). In Jackson v. Axton, 25 F.3d 884 (9th Cir. 1994), we affirmed a summary judgment for the defendant and remanded for reconsideration of the refusal to award fees under Fogerty II, explaining that under Fogerty II, courts deciding whether to grant attorney's fees to a prevailing party are to exercise "equitable discretion" in light of the considerations the Court identified, the degree of success obtained, the Lieb factors, and the purposes of the Copyright Act; and are to apply such factors in an evenhanded manner. Id. at 890. We have been careful to indicate that such factors are only "some" of the factors to consider, and that courts are not limited to considering them. See Maljack Productions, Inc., 81 F.3d at 889; Jackson, 25 F.3d at 890. And in Historical Research v. Cabral, 80 F.3d 377 (9th Cir. 1996), we concluded that, under Fogerty II, "'exceptional circumstances' are not a prerequisite to an award of attorneys fees; district courts may freely award fees, as long as they treat prevailing plaintiffs and prevailing defendants alike and seek to promote the Copyright Act's objectives." Id. at 378 (citations omitted); see also Magnuson v. Video Yesteryear, 85 F.3d 1424, 1432 (9th Cir. 1996) (reiterating importance of promoting the Copyright Act's objectives in considering attorney's fee awards).

We also have not previously been asked to decide whether the factors relied upon by a district court in awarding fees to a prevailing copyright defendant must be exactly capable of being applied to a prevailing plaintiff in order to satisfy the evenhanded rule. However, Fogerty II has already answered this question. Fantasy argues that the point of evenhandedness is to eliminate as the premise for any fee award any factor which cannot occur on both sides of the litigation equation. But we believe this asks more of "evenhandedness" than Fogerty II expects. Fantasy's argument is just another way of making two points rejected by the Supreme Court — that for a prevailing defendant to qualify for fees the plaintiff must be blameworthy because whenever a plaintiff prevails the defendant, by definition, is blameworthy; and that to award fees when the plaintiff isn't blameworthy chills enforcement of the copyright laws. Of the latter the Court states:

[T]he argument is flawed because it expresses a one-sided view of the purposes of the Copyright Act. While it is true that one of the goals of the Copyright Act is to discourage infringement, it is by no means the only goal of that Act. In the first place, it is by no means always the case that the plaintiff in an infringement action is the only holder of a copyright; often times, defendants hold copyrights too, as exemplified in the case at hand.

More importantly, the policies served by the Copyright Act are more complex, more measured, than simply maximizing the number of meritorious suits for copyright infringement.

Fogerty II, 510 U.S. at 526, 114 S.Ct. at 1029 (internal citation omitted). And of the former, the Court says, speaking directly to this case:

In the case before us, the successful defense of "The Old Man Down the Road" increased public exposure to a musical work that could, as a result, lead to further creative pieces. Thus a successful defense of a copyright infringement action may further the policies of the Copyright Act every bit as much as a successful prosecution of an infringement claim by the holder of a copyright.

Id. at 527, 114 S.Ct. at 1030. We cannot, therefore, say that the district court erred by relying on factors identified by the Supreme Court which in this case led it to conclude that Fogerty's defense sufficiently furthered the purposes of the Copyright Act to warrant an award of attorney's fees.

Nor do we agree with Fantasy that the district court's award of fees imported the British Rule through the back door. The British Rule requires an award of attorney's fees to every prevailing party, regardless of the circumstances; nothing is left for the court to decide except how much. However, [560] Fogerty II makes clear that attorney's fees are within the courts' discretion. The district court recognized this point and, as it concluded, the reasoning upon which it relied does not lead to compulsory fee awards to prevailing copyright defendants: copyright claims do not always involve defendant authors, let alone defendant authors accused of plagiarizing themselves, and do not always implicate the ultimate interests of copyright; copyright defendants do not always reach the merits, prevailing instead on technical defenses; defenses may be slight or insubstantial relative to the costs of litigation; the chilling effect of attorney's fees may be too great or impose an inequitable burden on an impecunious plaintiff; and each case will turn on its own particular facts and equities.

In sum, evenhandedness means that courts should begin their consideration of attorney's fees in a copyright action with an evenly balanced scale, without regard to whether the plaintiff or defendant prevails, and thereafter determine entitlement without weighting the scales in advance one way or the other. Courts may look to the nonexclusive Lieb factors as guides and may apply them so long as they are consistent with the purposes of the Copyright Act and are applied evenly to prevailing plaintiffs and defendants; a finding of bad faith, frivolous or vexatious conduct is no longer required; and awarding attorney's fees to a prevailing defendant is within the sound discretion of the district court informed by the policies of the Copyright Act.

Since the reasons given by the district court in this case are well-founded in the record and are in keeping with the purposes of the Copyright Act, the court acted within its discretion in awarding a reasonable attorney's fee to Fogerty.

B

Fantasy alternatively contends that the district court impermissibly based its award on a factual finding or assumption prohibited by Rule 49(a) of the Federal Rules of Civil Procedure^[4] — that the defense verdict was tantamount to a finding that similarities between "Run Through the Jungle" (Fogerty's earlier work which Fantasy now owns) and "Old Man Down the Road" were attributable to the uncopyrightable elements of the "Swamp Rock" genre and Fogerty's style of songwriting1because Fantasy had requested a special verdict which it says would have addressed this question had it not been turned down. For this proposition Fantasy relies on McDaniel v. Anheuser-Busch, Inc., 987 F.2d 298 (5th Cir. 1993), which holds that "by requesting the submission of a special issue, a party prevents an adverse Rule 49(a) 'deemed finding' by the court." Id. at 306 (emphasis added).

We don't see how Rule 49(a) has anything to do with the district court's own observations in the exercise of its equitable discretion. Unlike the court in McDaniel, the court here declined to submit special verdicts, and Rule 49(a) isn't even implicated. Regardless, Fantasy's proffered explanation for a non-infringement verdict not based on the lack of substantial similarity — independent creation — still furthers the purposes of the Copyright Act and would in any event support the award of fees to Fogerty.

C

Fantasy also argues that never before has a faultless copyright litigant been [561] ordered to pay the fees of an opponent. It says that the amount awarded is three times larger than any other award Fantasy has seen, and that if (contrary to its view) Fogerty II changed the standard this dramatically for awarding fees to prevailing defendants, it came years after Fantasy filed its case against Fogerty and is thus inequitable as applied to it.

If Fantasy intends by this argument to challenge the court's decision to award any attorney's fees that are not fault-based, we reject it for the reasons we have already explained. If, on the other hand, Fantasy seeks to attack only the amount of fees awarded, we also reject it but for different reasons. Because Fantasy does not identify any specific hours expended or hourly rates that are unreasonable, we have no basis for altering the amount awarded. Regardless, Fantasy's comparisons to fee awards in other cases are largely irrelevant, and certainly not determinative, inasmuch as the reasonableness of a particular fee award depends on a case-by-case analysis. Finally, that the standard for awarding fees changed after Fantasy filed its suit is a matter left to the district court's discretion and, as evidenced by Fogerty II and our post-Fogerty II remands, does not preclude an award of fees.

IV

On cross-appeal, Fogerty argues that the district court erred by improperly concluding that it did not have authority to award interest on his fees. However, as we read its order, the court recognized that it could award interest, but after surveying reported decisions, concluded that it isn't the normal practice to do so. On that basis, the court chose not to award interest under the circumstances of this case. This is consistent with the court's discretion and we will not disturb it. Cf. Burgess v. Premier Corp., 727 F.2d 826 (9th Cir. 1984) (no abuse of discretion in awarding fees based on current rather than historical hourly rates).

V

Fogerty requests attorney's fees for this appeal pursuant to 17 U.S.C. § 505 and FRAP 38. While we see no basis for awarding attorney's fees under FRAP 38, we conclude that fees are warranted under § 505 inasmuch as it served the purposes of the Copyright Act for Fogerty to defend an appeal so that the district court's fee award would not be taken away from him. We therefore award Fogerty the attorney's fees he incurred in defending this appeal and we remand to the district court for calculation of the amount.

AFFIRMED AND REMANDED.

[*] Hon. Harlington Wood, Jr., Senior Circuit Judge for the Seventh Circuit Court of Appeals, sitting by designation.

[1] Section 505 provides in full:

In any civil action under [the Copyright Act], the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.

[2] In Lieb, the defendant won on summary judgment and requested attorney's fees, contending that the copyright infringement claim was filed in bad faith, was frivolous, and should not have been brought after reasonable investigation. The district court denied the request without discussion. The Third Circuit remanded for a statement of reasons, but in doing so explained that "we do not require bad faith, nor do we mandate an allowance of fees as a concomitant of prevailing in every case, but we do favor an evenhanded approach." Id. at 156. The court went on to identify a number of factors which should play a part in the district courts' discretion, including "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence," but expressly declined to limit the factors to those mentioned. Id.

[3] See note 2, supra.

[4] Rule 49(a) provides in full:

(a) Special Verdicts. The court may require a jury to return only a special verdict in the form of a special written finding upon each issue of fact. In that event the court may submit to the jury written questions susceptible of categorical or other brief answer or may submit written forms of the several special findings which might properly be made under the pleadings and evidence; or it may use such other method of submitting the issues and requiring the written findings thereon as it deems most appropriate. The court shall give to the jury such explanation and instruction concerning the matter thus submitted as may be necessary to enable the jury to make its findings upon each issue. If in so doing the court omits any issue of fact raised by the pleadings or by the evidence, each party waives the right to a trial by jury of the issue so omitted unless before the jury retires the party demands its submission to the jury. As to an issue omitted without such demand the court may make a finding; or, if it fails to do so, it shall be deemed to have made a finding in accord with the judgment on the special verdict.

Fed.R.Civ.Proc. 49(a) (emphasis added).

[70] Marcia Beth Paul, Davis Wright Tremaine LLP, New York, NY, for Plaintiffs-Appellees.

Edward H. Rosenthal (Maura J. Wogan, Jessie F. Beeber, Cameron A. Myler, Marisa Sarig, on the brief), Frankfurt Kurnit Klein & Selz P.C., New York, NY, for Defendants-Appellants.

David E. Kendall, Thomas G. Hentoff, Kannon K. Shanmugam, Hannah M. Stott-Bumsted, Scott K. Dasovich, Williams & Connolly LLP, Washington, DC, for Amicus Curiae Motion Picture Association of America, Inc. in support of Plaintiffs-Appellees.

Anthony T. Falzone, Julie A. Ahrens, Sarah H. Pearson, Stanford Law School, Center for Internet & Society, Stanford, CA; Rebecca Tushnet, Georgetown University Law Center, Washington, DC; Jennifer M. Urban, Samuelson Law, Technology & Public Policy Clinic, University of California, Berkeley, School of Law, Berkeley, CA, for Amici Curiae American Library Association, Association of Research Libraries, Association of College and Research Libraries, The Organization for Transformative Works and the Right to Write Fund in support of Defendants-Appellants.

George Freeman, Itai Maytal, The New York Times Company, Legal Department, New York, NY, (Barbara W. Wall, Gannett Co., Inc., McLean, VA; Karen Flax, Tribune Company, Chicago, IL, of counsel), for Amici Curiae The New York Times Company, Gannett Co., Inc., and Tribune Company in support of Defendants-Appellants.

Deepak Gupta, Gregory A. Beck, Public Citizen Litigation Group, Washington, DC; Dan Hunter, New York Law School, New York, NY, for Amicus Curiae Public Citizen, Inc.

Before: CALABRESI, CABRANES, HALL, Circuit Judges.

CALABRESI, Circuit Judge:

Defendants-Appellants Fredrik Colting, Windupbird Publishing Ltd., Nicotext A.B., and ABP, Inc. appeal from an order of the United States District Court for the Southern District of New York (Deborah A. Batts, Judge) granting Plaintiff-Appellee J.D. Salinger's^[1] motion for a preliminary injunction. The District Court's judgment is VACATED and REMANDED.

Salinger published The Catcher in the Rye (hereinafter “Catcher”) in 1951. Catcher is a coming-of-age story about a disaffected sixteen-year-old boy, Holden Caulfield, who after being expelled from [71] prep school wanders around New York City for several days before returning home. The story is told from Holden's perspective and in his “own strange, wonderful, language.” Nash Burger, Books of the Times, N.Y. Times, July 16, 1951. Holden's adventures highlight the contrast between his cynical portrait of a world full of “phonies” and “crooks” and his love of family, particularly his younger sister Phoebe and his deceased younger brother Allie, along with his developing romantic interest in a childhood friend, Jane Gallagher. While his affection for these individuals pushes him throughout the novel toward human contact, his disillusionment with humanity inclines him toward removing himself from society and living out his days as a recluse. He ultimately abandons his decision to live as recluse when Phoebe insists on accompanying him on his self-imposed exile.

Catcher was an instant success. It was on the New York Times best-seller list for over seven months and sold more than one million copies in its first ten years. Polly Morrice, Descended from Salinger, N.Y. Times, March 23, 2008. To date it has sold over 35 million copies, Westberg Aff. ¶ 2, influenced dozens of literary works, and been the subject of “literally reams of criticism and comment,” Appellees' Br. 5. Literary critic Louis Menand has identified Catcher “rewrites” as a “literary genre all its own.”^[2] Holden at Fifty: “The Catcher in the Rye” and What It Spawned, The New Yorker, Oct. 1, 2001. The Holden character in particular has become a cultural icon of “adolescent alienation and rebellion,” Appellants' Br. 7, a “moral genius” “who refuses to be socialized.” Menand, Holden at Fifty, supra.

Inseparable from the Catcher mystique is the lifestyle of its author, Salinger.^[3] Shortly after publishing Catcher, Salinger did what Holden did not do: he removed himself from society. Salinger has not published since 1965 and has never authorized any new narrative involving Holden or any work derivative of Catcher. Westberg Aff. ¶¶ 15, 16. Other than a 1949 film adaptation of one of his early short stories, Salinger has never permitted, and has explicitly instructed his lawyers not to allow, adaptations of his works. Id. ¶ 16. He has, however, remained in the public spotlight through a series of legal actions to protect his intellectual property. Id. ¶ 19. Salinger has registered and duly renewed his copyright in Catcher with the U.S. Copyright Office.

Defendant-Appellant Fredrik Colting wrote 60 Years Later: Coming Through the Rye (hereinafter “ 60 Years Later”) under the pen name “John David California.” Colting published 60 Years Later with his own publishing company, Defendant-Appellant Windupbird Publishing, Ltd., in England on May 9, 2009. Copies were originally scheduled to be available in the United States on September 15, 2009. Westberg Aff. ¶ 2. Colting did not seek Salinger's permission to publish 60 Years Later. Id. ¶ 3.

60 Years Later tells the story of a 76-year-old Holden Caulfield, referred to as “Mr. C,” in a world that includes Mr. C's 90-year-old author, a “fictionalized Salinger.”[72]^[4] The novel's premise is that Salinger has been haunted by his creation and now wishes to bring him back to life in order to kill him. Unsurprisingly, this task is easier said than done. As the story progresses, Mr. C becomes increasingly self-aware and able to act in ways contrary to the will of Salinger. After a series of misadventures, Mr. C travels to Cornish, New Hampshire, where he meets Salinger in his home. Salinger finds he is unable to kill Mr. C and instead decides to set him free. The novel concludes with Mr. C reuniting with his younger sister, Phoebe, and an estranged son, Daniel.

In bringing this suit, Salinger underscores the extensive similarities between 60 Years Later and Catcher. First, Mr. C is Holden Caulfield. Mr. C narrates like Holden, references events that happened to Holden, and shares many of Holden's notable eccentricities. Appellees' Br. 8. Also, Mr. C's adventures parallel those of Holden. Both characters leave an institution, wander around New York City for several days, reconnect with old friends, find happiness with Phoebe, and ultimately return to a different institution. Finally, within these broader structural similarities, the novels contain similar scenes, such as a climactic carousel scene. Id. 9-10.

Salinger also cites Defendants' efforts to market 60 Years Later as a sequel to Catcher. The back cover of the United Kingdom edition describes the novel as “a marvelous sequel to one of our most beloved classics.” Westberg Aff. ¶ 32. In a 2009 interview in the Guardian, Colting describes 60 Years Later as “[j]ust like the first novel.... He's still Holden Caulfield, and has a particular view on things.” Alison Flood, Catcher in the Rye Sequel Published, but Not by Salinger, Guardian, May 14, 2009.

Colting responds that 60 Years Later is not, and was never intended to be, a sequel to Catcher. Rather, Colting claims that it is a “critical examination of the character Holden and the way he is portrayed in [ Catcher], the relationship between Salinger and his iconic creation, and the life of a particular author as he grows old but remains imprisoned by the literary character he created.” Appellants' Br. 9-10. In support of this claim, Colting first emphasizes that a main character in 60 Years Later-Salinger himself, who narrates portions of the novel-does not appear in Catcher. Next, he explains how the Mr. C character evolves from a two-dimensional and absurd version of a sixteen-year-old Holden into a real person with a rich life completely apart from Catcher. Finally, he relies upon the declarations of two literary experts. Martha Woodmansee, a professor of English and law at Case Western Reserve University, described 60 Years Later as a “work of meta-commentary” that “pursues critical reflection on J.D. Salinger and his masterpiece [ Catcher] just as do the articles that literary scholars conventionally write and publish in scholarly journals, but it casts its commentary in an innovative ‘post modern’ form, specifically, that of a novel.” Woodmansee Decl. ¶ 9. Robert Spoo, a professor at the University of Tulsa College of Law, found 60 Years Later to be a “sustained commentary on and critique of Catcher, revisiting and analyzing the attitudes and assumptions of the teenaged Holden Caulfield. In this respect, [ 60 Years Later] is similar to a work of literary criticism.” Spoo Decl. ¶ 7.

On July 1, 2009, the District Court granted Salinger's motion for a preliminary injunction, barring Defendants from “manufacturing, publishing, distributing, shipping, advertising, promoting, selling, or otherwise disseminating any copy of [60 Years Later], or any portion thereof, in or to the United States.” Salinger v. Colting, 641 F.Supp.2d 250, 269 (S.D.N.Y.2009). In doing so, it found that (1) Salinger has a valid copyright in Catcher and the Holden Caulfield character, (2) absent a successful fair use defense, Defendants have infringed Salinger's copyright in both Catcher and the Holden Caulfield character, (3) Defendants' fair use defense is likely to fail, and (4) a preliminary injunction should issue.

The District Court disposed of the first two issues in its decision's introduction. Defendants did not contest that Salinger has a valid copyright in Catcher. And regarding the Holden character, the Court stated that the character is “sufficiently delineated so that a claim for infringement will lie.” Id. at 254. The Court elaborated on this finding in a June 17, 2009 hearing:

Holden Caulfield is quite delineated by word. It is a portrait by words. It is something that is obviously seen to be of value since the effort is made [by defendants] to recall everything that the character in the book does.... It is difficult, in fact, to separate Holden Caulfield from the book

Special App. 8 (Hr'g Tr. 24). Having found a valid copyright in both Catcher and the Holden character, the Court concluded that “there is substantial similarity between Catcher and [ 60 Years Later], as well as between the character Holden Caulfield from Catcher, and the character Mr. C from [ 60 Years Later], such that it was an unauthorized infringement of Plaintiff's copyright.” Salinger,641 F.Supp.2d at 254.

The District Court next concluded that Defendants' fair use defense is likely to fail and that therefore Salinger has established a prima facie case of copyright infringement. In its consideration of the four statutory factors, the Court found that not one supports Defendants' claim of fair use. Id. at 255.

Regarding the first factor, the “purpose and character of the use,” 17 U.S.C. § 107(1), the Court held that 60 Years Later is not sufficiently “transformative” of Catcher, the Holden character, or Salinger, id. at 256 (quoting Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994)). One recognized form of transformative value, the Court noted, is parody, which requires a “reasonably discernable rejoinder or specific criticism of any character or theme.” Id. at 258. The Court found that 60 Years Later does not parody Catcher or the Holden character, and although it might parody Salinger, that is insufficient because according to the Supreme Court's decision in Campbell, 510 U.S. at 580, 114 S.Ct. 1164, parody must critique or comment on the work itself, Salinger, 641 F.Supp.2d at 256-57.

The District Court similarly concluded that 60 Years Later does not have sufficient nonparodic transformative value. Although 60 Years Later's comment on Salinger himself “has some transformative value,” id. at 262, the Court found that it is insufficient to render the work as a whole transformative for three reasons. First, according to Colting's public statements, his purpose for writing 60 Years Later was not to comment on Salinger but to write a Catcher sequel. Id. at 259-60 & n. 3 Second, Salinger is a “minor or supporting character” in 60 Years Later. Id. at 262. And third, the ratio of borrowed [74] to transformative elements in Catcher is too high to render the entire work transformative. Id. at 262-63. Finally, the Court observed that 60 Years Later's commercial nature further cuts against Defendants on the “purpose and character of the use” factor. Id. at 263.

Addressing the second and third factors, see 17 U.S.C. § 107(2)-(3), the District Court held with respect to the “nature of the copyrighted work” that Catcher is a “‘creative expression for public dissemination [that] falls within the core of the copyright's protective purposes.’” Id. at 263 (quoting Campbell, 510 U.S. at 586, 114 S.Ct. 1164). It then found as to “the amount and substantiality of the portion used in relation to the copyrighted work as a whole” that Colting took “well more from Catcher, in both substance and style, than is necessary for the alleged transformative purpose of criticizing Salinger and his attitudes and behavior.” Id.

The District Court went on to conclude that the fourth factor, “the effect of the use upon the potential market for or value of the copyrighted work,” 17 U.S.C. § 107(4), weighs “slightly” in Salinger's favor, Salinger, 641 F.Supp.2d at 267-68. The Court acknowledged that 60 Years Later is unlikely to impact the sales of Catcher itself, but it found that an unauthorized sequel might undermine the potential market for an authorized Catcher sequel, whether through loss of the novelty of a sequel or through confusion as to which of the sequels is the authorized one. Although the Court recognized that Salinger has publicly disclaimed any intention of authorizing a sequel, the Court noted that Salinger has the right to change his mind and, even if he has no intention of changing his mind, there is value in the right not to authorize derivative works. Id.

Having made this determination, the District Court turned to whether a preliminary injunction should issue. According to the Court:

Under Rule 65, to obtain a preliminary injunction a party must demonstrate: (1) that it will be irreparably harmed if an injunction is not granted, and (2) either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation, and a balance of hardships tipping decidedly in its favor.

Id. at 254 (quotation marks and alterations omitted). Given its findings, the Court deemed the only remaining question to be whether Salinger had shown that he would be irreparably harmed if an injunction was not granted. Because Salinger had established a prima facie case of copyright infringement, and in light of how the District Court, understandably, viewed this Court's precedents, the District Court presumed irreparable harm without discussion. Id. at 268 (citing ABKCO Music, Inc. v. Stellar Records, Inc.,96 F.3d 60, 66 (2d Cir.1996)). In a footnote, the Court stated:

Although Defendants contend that eBay, Inc. v. MercExchange, 547 U.S. 388, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006), undermines the validity of this presumption, that case dealt only with the presumption of irreparable harm in the patent law context, and thus is not controlling in the absence of Second Circuit precedent applying it in the copyright context.

Id.at 268 n. 6.

We hold that, although the District Court applied our Circuit's longstanding standard for preliminary injunctions in copyright cases, our Circuit's standard is inconsistent with the “test historically employed [75] by courts of equity” and has, therefore, been abrogated by eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 390, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).

The Copyright Act of 1976 authorizes courts to “grant temporary and final injunctions on such terms as [they] may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C. § 502(a). And, as the District Court stated, this Court has long issued preliminary injunctions in copyright cases upon a finding of (a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief. See, e.g., NXIVM Corp. v. Ross Inst., 364 F.3d 471, 476 (2d Cir.2004); ABKCO Music, Inc. v. Stellar Records, Inc., 96 F.3d 60, 64 (2d Cir.1996); Video Trip Corp. v. Lightning Video, Inc., 866 F.2d 50, 52 (2d Cir.1989); Wainwright Sec., Inc. v. Wall St. Transcript Corp., 558 F.2d 91, 94 (2d Cir.1977).^[5]

Thus, once a plaintiff establishes a likelihood of success on the merits, the only additional requirement is a showing that the plaintiff will be irreparably harmed if the preliminary injunction does not issue. And traditionally, this Court has presumed that a plaintiff likely to prevail on the merits of a copyright claim is also likely to suffer irreparable harm if an injunction does not issue. See, e.g., Richard Feiner & Co., Inc. v. Turner Entm't Co., 98 F.3d 33, 34 (2d Cir.1996); ABKCO Music, 96 F.3d at 64; Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192 (2d Cir.1985).

This Court has applied this presumption in several ways. Some decisions have interpreted the presumption to mean that a plaintiff likely to prevail on the merits does not need to make a detailed showing of irreparable harm. See, e.g., Wainwright, 558 F.2d at 94 (“In copyright cases, ... if probable success-a prima facie case of copyright infringement-can be shown, the allegations of irreparable injury need not be very detailed, because such injury can normally be presumed when a copyright is infringed.”); Robert Stigwood Group Ltd. v. Sperber, 457 F.2d 50, 55 (2d Cir.1972); Am. Metro. Enters. of N.Y. v. Warner Bros. Records, Inc., 389 F.2d 903, 905 (2d Cir.1968); Rushton v. Vitale, 218 F.2d 434, 436 (2d Cir.1955). Other cases have discussed the presumption as though it applies automatically and is irrebuttable. See, e.g., Rice v. Am. Program Bureau, 446 F.2d 685, 688 (2d Cir.1971) (“It is likewise well settled that when a prima facie case is made out a preliminary injunction should issue without the showing of irreparable injury....”); Am.Code Co. v. Bensinger, 282 F. 829, 834 (2d Cir.1922) (“In cases of infringement of copyright, an injunction has always been recognized as a proper remedy, because of the inadequacy of the legal remedy.”). A few decisions, by contrast, have found the presumption rebuttable where the plaintiff delayed in bringing the action seeking an injunction. See Richard Feiner, 98 F.3d at 34; Fisher-Price, Inc. v. Well-Made Toy Mfg. Corp., 25 F.3d 119, 124 (2d Cir.1994); [76] Bourne Co. v. Tower Records, Inc., 976 F.2d 99, 101 (2d Cir.1992).

Under any of these articulations, however, this Court has nearly always issued injunctions in copyright cases as a matter of course upon a finding of likelihood of success on the merits. Cf. Mark A. Lemley & Eugene Volokh, Freedom of Speech and Injunctions in Intellectual Property Cases, 48 Duke L.J. 147, 159 (1998) (“The ostensibly four-factor test collapses ... to a simple inquiry into likelihood of success on the merits. If that can be demonstrated, a preliminary injunction is the expected remedy.” (footnotes omitted)). But see Am. Visuals Corp. v. Holland, 219 F.2d 223 (2d Cir.1955) (affirming denial of injunction because, among other reasons, plaintiff failed to show that money damages would be inadequate).

Defendants do not claim that the District Court failed to apply this Circuit's longstanding preliminary injunction standard. Rather, they argue both that this standard is an unconstitutional prior restraint on speech and that it is in conflict with the Supreme Court's decision in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). We agree that eBay abrogated parts of this Court's preliminary injunction standard in copyright cases, and accordingly, this case must be remanded to the District Court to reevaluate Salinger's preliminary injunction motion. In light of that holding, we need not decide whether the preliminary injunction issued by the District Court constituted an unconstitutional prior restraint on speech.

eBay involved the propriety of a permanent injunction after a finding of patent infringement. The United States District Court for the Eastern District of Virginia had ostensibly applied the traditional four-factor test for determining whether a permanent injunction should issue:

Issuance of injunctive relief against [the defendants] is governed by traditional equitable principles, which require consideration of (i) whether the plaintiff would face irreparable injury if the injunction did not issue, (ii) whether the plaintiff has an adequate remedy at law, (iii) whether granting the injunction is in the public interest, and (iv) whether the balance of the hardships tips in the plaintiff's favor.

MercExchange, L.L.C. v. eBay, Inc., 275 F.Supp.2d 695, 711 (E.D.Va.2003) (quotation marks omitted). In its application of this test, however, the district court “appeared to adopt certain expansive principles suggesting that injunctive relief could not issue in a broad swath of cases.” eBay, 547 U.S. at 393, 126 S.Ct. 1837. Specifically, the district court found that “the evidence of the plaintiff's willingness to license its patents, its lack of commercial activity in practicing the patents, and its comments to the media as to its intent with respect to enforcement of its patent rights, are sufficient to rebut the presumption that it will suffer irreparable harm if an injunction does not issue.” eBay, 275 F.Supp.2d at 712. The Federal Circuit reversed on appeal, applying a “general rule ... that a permanent injunction will issue once infringement and validity have been adjudged.” MercExchange, L.L.C. v. eBay, Inc., 401 F.3d 1323, 1338 (Fed.Cir.2005). The court cited for this rule Richardson v. Suzuki Motor Co, which equates the “general rule” with a rule that “[i]n matters involving patent rights, irreparable harm has been presumed when a clear showing has been made of patent validity and infringement.” 868 F.2d 1226, 1246-47 (Fed.Cir.1989) (quoting H.H. Robertson Co. v. United Steel Deck, Inc.,820 F.2d 384, 390 (Fed.Cir.1987)).

[77] Writing for a unanimous Court, Justice Thomas held that neither the district court nor the Federal Circuit correctly applied the equitable factors:

According to well-established principles of equity, a plaintiff seeking a permanent injunction must satisfy a four-factor test before a court may grant such relief. A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

eBay, 547 U.S. at 391, 126 S.Ct. 1837. Although the courts below had articulated the correct standard, they had both, albeit in different ways, applied “broad classifications” that were inconsistent with traditional equitable principles. Id.at 393, 126 S.Ct. 1837.

This Court has not directly addressed the scope of eBay.^[6] And district courts in our Circuit have split on eBay's reach. Compare, e.g., Lennon v. Premise Media Corp., 556 F.Supp.2d 310, 319-20 n. 1 (S.D.N.Y.2008) (holding that eBay only applies to permanent injunctions in patent cases), with Microsoft Corp. v. AGA Solutions, Inc., 589 F.Supp.2d 195, 204 (E.D.N.Y.2008) (applying eBay in a permanent injunction trademark case). Two district court decisions have noted that the scope of eBay remains an open question in this Circuit and have decided the cases before them without determining whether the eBay or pre- eBay standard applied. See Gayle Martz, Inc. v. Sherpa Pet Group, L.L. C., 651 F.Supp.2d 72, 85 (S.D.N.Y.2009); Warner Bros. Entm't Inc. v. RDR Books, 575 F.Supp.2d 513, 552 (S.D.N.Y.2008).

We hold today that eBay applies with equal force (a) to preliminary injunctions (b) that are issued for alleged copyright infringement. First, nothing in the text or the logic of eBay suggests that its rule is [78] limited to patent cases. On the contrary, eBay strongly indicates that the traditional principles of equity it employed are the presumptive standard for injunctions in any context.^[7] Significantly, after laying out the four-factor test quoted above, eBay cites two cases: Weinberger v. Romero-Barcelo, 456 U.S. 305, 311-13, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982), which involved a permanent injunction after a finding that the defendant violated the Federal Water Pollution Control Act, and Amoco Production Co. v. Village of Gambell, 480 U.S. 531, 542, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987), which involved a preliminary injunction in which the plaintiff alleged that the defendant was violating § 810 of the Alaska National Interest Lands Conservation Act, eBay, 547 U.S. at 391, 126 S.Ct. 1837. The Court then looked to whether the logic of these cases should apply in the patent context. Reasoning that “‘a major departure from the long tradition of equity practice should not be lightly implied,’” id. at 391, 126 S.Ct. 1837 (quoting Weinberger, 456 U.S. at 320, 102 S.Ct. 1798), the Court concluded that “[t]hese familiar principles apply with equal force to disputes arising under the Patent Act,” id.

Moreover, the Court expressly relied upon copyright cases in reaching its conclusion. In response to the Federal Circuit's reasoning that the Patent Act's right to exclude justifies the preference for injunctive relief, the Court stated that “the creation of a right is distinct from the provision of remedies for violations of that right.” Id. at 392. In support of this distinction, it noted that “[l]ike a patent owner, a copyright holder possesses the right to exclude others from using his property.” Id. (quotation marks omitted). It further noted that “[l]ike the Patent Act, the Copyright Act provides that courts ‘may’ grant injunctive relief ‘on such terms as it may deem reasonable to prevent or restrain infringement of copyright.’” Id. (quoting 17 U.S.C. § 502(a)). Because of these similarities, the Court emphasized that it “has consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright has been infringed.” Id. at 392-93, 102 S.Ct. 1798 (citing N.Y. Times Co. v. Tasini, 533 U.S. 483, 505, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001); Campbell, 510 U.S. at 578 n. 10, 114 S.Ct. 1164; Dun v. Lumbermen's Credit Ass'n., 209 U.S. 20, 23-24, 28 S.Ct. 335, 52 L.Ed. 663 (1908)). Whatever the underlying issues and particular circumstances of the cases cited by the Court in eBay, it seems clear that the Supreme Court did not view patent and copyright injunctions as different in kind, or as requiring different standards.

Nor does eBay, as reinforced by the Supreme Court's very recent decision in Winter v. Natural Resources Defense Council, --- U.S. ----, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008), permit an easier grant of a preliminary than of a permanent injunction. First, as mentioned above, one of the two cases eBay relied upon in stating the traditional equitable test involved a preliminary injunction. See Amoco Prod., 480 U.S. at 542, 107 S.Ct. 1396; see also [79] id. at 546 n. 12, 107 S.Ct. 1396 (“The standard for a preliminary injunction is essentially the same as for a permanent injunction with the exception that the plaintiff must show a likelihood of success on the merits rather than actual success.”). Second, in Winter, the Supreme Court in fact applied eBay in a case involving a preliminary injunction. Reversing the Ninth Circuit, which had preliminarily enjoined the Navy's use of sonar in training exercises based on a “strong” likelihood of success on the merits and a “possibility” of irreparable harm, the Court stated: “Issuing a preliminary injunction based only on a possibility of irreparable harm is inconsistent with our characterization of injunctive relief as an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter, 129 S.Ct. at 375-76. And using broad, unqualified language, the Court discussed the preliminary injunction standard as follows:

A preliminary injunction is an extraordinary remedy never awarded as of right. In each case, courts must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief. In exercising their sound discretion, courts of equity should pay particular regard for the public consequences in employing the extraordinary remedy of injunction.

Id. at 376-77 (quotation marks and citations omitted) (citing Munaf v. Geren, 553 U.S. 674, 128 S.Ct. 2207, 2218-19, 171 L.Ed.2d 1 (2008); Amoco Prod., 480 U.S. at 542, 107 S.Ct. 1396; Weinberger,456 U.S. at 312, 102 S.Ct. 1798).

This Court's pre- eBay standard for when preliminary injunctions may issue in copyright cases is inconsistent with the principles of equity set forth in eBay. The Supreme Court's decision in Winter tells us that, at minimum, we must consider whether “irreparable injury is likely in the absence of an injunction,” we must “‘balance the competing claims of injury,’” and we must “‘pay particular regard for the public consequences in employing the extraordinary remedy of injunction.’”^[8]. 129 S.Ct. at 375-77 (quoting Amoco, 480 U.S. at 542, 107 S.Ct. 1396; Weinberger, 456 U.S. at 312, 102 S.Ct. 1798). Therefore, in light of Winter and eBay, we hold that a district court must undertake the following inquiry in determining whether to grant a plaintiff's motion for a preliminary injunction in a copyright case. First, as in most other kinds of cases in our Circuit, a court may issue a preliminary injunction in a copyright case only if the plaintiff has demonstrated “either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the [plaintiff]' s favor.” NXIVM Corp., 364 F.3d at 476; see also, e.g., Faiveley Transp. Malmo AB v. Wabtec Corp., 559 F.3d 110, 116 (2d Cir.2009). Second, the [80] court may issue the injunction only if the plaintiff has demonstrated “that he is likely to suffer irreparable injury in the absence of an injunction.” Winter, 129 S.Ct. at 374. The court must not adopt a “categorical” or “general” rule or presume that the plaintiff will suffer irreparable harm (unless such a “departure from the long tradition of equity practice” was intended by Congress). eBay, 547 U.S. at 391, 393-94, 126 S.Ct. 1837. Instead, the court must actually consider the injury the plaintiff will suffer if he or she loses on the preliminary injunction but ultimately prevails on the merits, paying particular attention to whether the “remedies available at law, such as monetary damages, are inadequate to compensate for that injury.” eBay, 547 U.S. at 391, 126 S.Ct. 1837; see also Winter, 129 S.Ct. at 375 (quoting 11A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2948.1 (2d ed.1995), for the proposition that an applicant for a preliminary injunction “must demonstrate that in the absence of a preliminary injunction, ‘the applicant is likely to suffer irreparable harm before a decision on the merits can be rendered’”). Third, a court must consider the balance of hardships between the plaintiff and defendant and issue the injunction only if the balance of hardships tips in the plaintiff's favor. Winter, 129 S.Ct. at 374; eBay, 547 U.S. at 391, 126 S.Ct. 1837. Finally, the court must ensure that the “public interest would not be disserved” by the issuance of a preliminary injunction. eBay, 547 U.S. at 391, 126 S.Ct. 1837; accord Winter, 129 S.Ct. at 374.

Second, the court may issue the injunction only if the plaintiff has demonstrated “that he is likely to suffer irreparable injury in the absence of an injunction.” Winter, 129 S.Ct. at 374. The court must not adopt a “categorical” or “general” rule or presume that the plaintiff will suffer irreparable harm (unless such a “departure from the long tradition of equity practice” was intended by Congress). eBay, 547 U.S. at 391, 393-94, 126 S.Ct. 1837. Instead, the court must actually consider the injury the plaintiff will suffer if he or she loses on the preliminary injunction but ultimately prevails on the merits, paying particular attention to whether the “remedies available at law, such as monetary damages, are inadequate to compensate for that injury.” eBay, 547 U.S. at 391, 126 S.Ct. 1837; see also Winter, 129 S.Ct. at 375 (quoting 11A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2948.1 (2d ed.1995), for the proposition that an applicant for a preliminary injunction “must demonstrate that in the absence of a preliminary injunction, ‘the applicant is likely to suffer irreparable harm before a decision on the merits can be rendered’”). Third, a court must consider the balance of hardships between the plaintiff and defendant and issue the injunction only if the balance of hardships tips in the plaintiff's favor. Winter, 129 S.Ct. at 374; eBay, 547 U.S. at 391, 126 S.Ct. 1837. Finally, the court must ensure that the “public interest would not be disserved” by the issuance of a preliminary injunction. eBay, 547 U.S. at 391, 126 S.Ct. 1837; accord Winter, 129 S.Ct. at 374.

The first consideration in the preliminary injunction analysis is the probability of success on the merits. In gauging this, we emphasize that courts should be particularly cognizant of the difficulty of predicting the merits of a copyright claim at a preliminary injunction hearing. See Lemley & Volokh, supra, at 201-02 (“[When deciding whether to grant a TRO or a preliminary injunction,] the judge has limited time for contemplation. The parties have limited time for briefing. Preparation[81] for a typical copyright trial, even a bench trial, generally takes many months; the arguments about why one work isn't substantially similar in its expression to another, or about why it's a fair use of another, are often sophisticated and fact-intensive, and must be crafted with a good deal of thought and effort.”). This difficulty is compounded significantly when a defendant raises a colorable fair use defense. “Whether [a] taking[ ] will pass the fair use test is difficult to predict. It depends on widely varying perceptions held by different judges.” Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L.Rev. 1105, 1132 (1990); see also Campbell, 510 U.S. at 578 n. 10, 114 S.Ct. 1164 (noting that “the fair use enquiry often requires close questions of judgment”).

Next, the court must consider whether the plaintiff will suffer irreparable harm in the absence of a preliminary injunction, and the court must assess the balance of hardships between the plaintiff and defendant. Those two items, both of which consider the harm to the parties, are related. The relevant harm is the harm that (a) occurs to the parties' legal^[9] interests and (b) cannot be remedied after a final adjudication, whether by damages or a permanent injunction. The plaintiff's interest is, principally, a property interest in the copyrighted material. See Wheaton v. Peters, 33 U.S. (8 Pet.) 591, 661, 8 L.Ed. 1055 (1834). But as the Supreme Court has suggested, a copyright holder might also have a First Amendment interest in not speaking. See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 559, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985). The defendant to a copyright suit likewise has a property interest in his or her work to the extent that work does not infringe the plaintiff's copyright. And a defendant also has a core First Amendment interest in the freedom to express him or herself, so long as that expression does not infringe the plaintiff's copyright.

But the above-identified interests are relevant only to the extent that they are not remediable after a final adjudication. Harm might be irremediable, or irreparable, for many reasons, including that a loss is difficult to replace or difficult to measure, or that it is a loss that one should not be expected to suffer. In the context of copyright infringement cases, the harm to the plaintiff's property interest has often been characterized as irreparable in light of possible market confusion. See Merkos L'Inyonei Chinuch, Inc. v. Otsar Sifrei Lubavitch, Inc., 312 F.3d 94, 96-97 (2d Cir.2002). And courts have tended to issue injunctions in this context because “to prove the loss of sales due to infringement is ... notoriously difficult.” Omega Importing Corp. v. Petri-Kine Camera Co., 451 F.2d 1190, 1195 (2d Cir.1971) (Friendly, C.J.). Additionally, “[t]he loss of First Amendment freedoms,” and hence infringement of the right not to speak, “for even minimal periods of time, unquestionably constitutes irreparable injury.” Elrod v. Burns, 427 U.S. 347, 373, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976).^[10]

[82] After eBay, however, courts must not simply presume irreparable harm. See eBay, 547 U.S. at 393, 126 S.Ct. 1837. Rather, plaintiffs must show that, on the facts of their case, the failure to issue an injunction would actually cause irreparable harm. This is not to say that most copyright plaintiffs who have shown a likelihood of success on the merits would not be irreparably harmed absent preliminary injunctive relief. As an empirical matter, that may well be the case, and the historical tendency to issue preliminary injunctions readily in copyright cases may reflect just that. See H. Tomás Gómez-Arostegui, What History Teaches Us About Copyright Injunctions and the Inadequate-Remedy-at-Law Requirement, 81 S. Cal. L.Rev. 1197, 1201 (2008) (concluding, after a thorough historical analysis, that “the historical record suggests that in copyright cases, legal remedies were deemed categorically inadequate”). As Chief Justice Roberts noted, concurring in eBay:

From at least the early 19th century, courts have granted injunctive relief upon a finding of infringement in the vast majority of patent cases. This “long tradition of equity practice” is not surprising, given the difficulty of protecting a right to exclude through monetary remedies.... This historical practice, as the Court holds, does not entitle a patentee to [an] ... injunction or justify a general rule that such injunctions should issue.... At the same time, there is a difference between exercising equitable discretion pursuant to the established four-factor test and writing on an entirely clean slate.... When it comes to discerning and applying those standards, in this area as others, a page of history is worth a volume of logic.

547 U.S. at 395, 126 S.Ct. 1837 (quotation marks omitted).

But by anchoring the injunction standard to equitable principles, albeit with one eye on historical tendencies, courts are able to keep pace with innovation in this rapidly changing technological area. Justice Kennedy, responding to Justice Roberts, made this very point as to patent injunctions in his eBay concurrence. Although the “lesson of the historical practice ... is most helpful and instructive when the circumstances of a case bear substantial parallels to litigation the courts have confronted before[,] ... in many instances the nature of the patent being enforced and the economic function of the patent holder present considerations quite unlike earlier cases.” Id. at 396, 126 S.Ct. 1837. Justice Kennedy concluded that changes in the way parties use patents may now mean that “legal damages [are] sufficient to compensate for the infringement.” Id.

Finally, courts must consider the public's interest. The object of copyright law is to promote the store of knowledge available to the public. But to the extent it accomplishes this end by providing individuals a financial incentive to contribute to the store of knowledge, the public's interest may well be already accounted for by the plaintiff's interest.

The public's interest in free expression, however, is significant and is distinct from the parties' speech interests. See Pac. Gas & Elec. Co. v. Pub. Utils. Comm'n of Cal., 475 U.S. 1, 8, 106 S.Ct. 903, 89 L.Ed.2d 1 (1986). “By protecting those who wish to enter the marketplace of ideas from government attack, the First Amendment protects the public's interest in receiving information.” Id. Every injunction issued before a final adjudication on the merits risks enjoining speech protected by the First Amendment. Some [83] uses, however, will so patently infringe another's copyright, without giving rise to an even colorable fair use defense, that the likely First Amendment value in the use is virtually nonexistent.

Because the District Court considered only the first of the four factors that, under eBay and our holding today, must be considered before issuing a preliminary injunction, we vacate and remand the case. But in the interest of judicial economy, we note that there is no reason to disturb the District Court's conclusion as to the factor it did consider-namely, that Salinger is likely to succeed on the merits of his copyright infringement claim.

Most of the matters relevant to Salinger's likelihood of success on the merits are either undisputed or readily established in his favor. Thus, Defendants do not contest either that Salinger owns a valid copyright in Catcher or that they had actual access to Catcher. And while they argue only that 60 Years Later and Catcher are not substantially similar, that contention is manifestly meritless.^[11] “In considering substantial similarity between two items, we review the district court's findings de novo-not on the clearly erroneous standard-because what is required is only a visual comparison of the works, rather than credibility, which we are in as good a position to decide as was the district court.” Folio Impressions, Inc. v. Byer Cal., 937 F.2d 759, 766 (2d Cir.1991). And for largely the same reasons as the District Court, we affirm the District Court's finding that Catcher and 60 Years Later are substantially similar.

More serious is Defendants' assertion of a fair use defense. And at this preliminary stage, we agree with the District Court that Defendants will not likely be able to make out such a defense. The District Court in its discussion of fair use focused on the first statutory factor: the “purpose and character of the use.” 17 U.S.C. § 107(1). In doing this, the Court found that “[i]t is simply not credible for Defendant Colting to assert now that his primary purpose was to critique Salinger and his persona, while he and his agents' previous statements regarding the book discuss no such critique, and in fact reference various other purposes behind the book.” Salinger, 641 F.Supp.2d at 262. Such a finding is not clear error. See Anderson v. Bessemer City, 470 U.S. 564, 575, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985) (a district court's findings regarding witness credibility are to be reviewed for clear error). It may be that a court can find that the fair use factor favors a defendant even when the defendant and his work lack a transformative purpose. We need not decide that issue here, however, for when we consider the District Court's credibility finding together with all the other facts in this case, we conclude, with the District Court, that Defendants are not likely to prevail in their fair use defense.^[12]

In this preliminary injunction case, the District Court erred by not applying the equitable standard outlined by the Supreme Court in eBay, Inc. v. MercExchange, L.L. C. and Winter v. Natural Resources Defense Council. Accordingly, we vacate and remand for further proceedings consistent with this opinion. The preliminary injunction will stay in place for ten days following the issuance of the mandate so that Appellees will have an opportunity to apply for a temporary restraining order pending the rehearing of the motion for a preliminary injunction.

[1] We note that Plaintiff-Appellee J.D. Salinger died during the pendency of this appeal. In a February 18, 2010 order, we granted the motion of Colleen M. Salinger and Matthew R. Salinger, trustees of the J.D. Salinger Literary Trust, to be substituted for Salinger as Appellees. For reasons of convenience, however, we will continue to refer to Salinger as “Plaintiff” or “Appellee” in this opinion.

[2] Menand includes among Catcher “rewrites” Sylvia Plath's The Bell Jar (1963), Hunter S. Thompson's Fear and Loathing in Las Vegas (1971), Jay McInerney's Bright Lights, Big City (1984), and Dave Eggers's A Heartbreaking Work of Staggering Genius (2000).

[3] Salinger has conceded that Catcher is “sort of” autobiographical. Paul Alexander, Salinger: A Biography 177-78 (1999).

[4] Appellants concede that Mr. C is Holden Caulfield and that the unnamed author living in Cornish, New Hampshire is a “fictionalized Salinger.” Special App. 6-7 (Hr'g Tr. 16-17, June 17, 2009); Appellants' Br. 10.

[5] The overwhelming majority of decisions addressing injunction motions have focused solely on whether the plaintiff has shown a likelihood of success on the merits and irreparable harm, rather than on balancing the hardships. But see Random House, Inc. v. Rosetta Books L.L. C., 283 F.3d 490, 492 (2d Cir.2002) (considering the balance of hardships but finding the standard unsatisfied); Consumers Union of U.S., Inc. v. Gen. Signal Corp., 724 F.2d 1044, 1054 (2d Cir.1983) (same).

[6] In Time Warner Cable, Inc. v. DIRECTV, Inc., 497 F.3d 144, 162 (2d Cir.2007), this Court applied the pre- eBay standard where the plaintiff sought a preliminary injunction claiming false advertising under the Lanham Act. But whether eBay affected that standard was neither raised by the parties nor discussed by either the district court or this Court on appeal. Accordingly, Time Warner Cable is not binding precedent on this issue. See Webster v. Fall, 266 U.S. 507, 511, 45 S.Ct. 148, 69 L.Ed. 411 (1924). Similarly, the Federal Circuit has, without discussion, applied a pre- eBay standard in one post- eBay copyright case involving a preliminary injunction. Jacobsen v. Katzer, 535 F.3d 1373, 1378 (Fed.Cir.2008) (applying the Ninth Circuit's pre- eBay standard); see also Abercrombie & Fitch Co. v. Moose Creek, Inc., 486 F.3d 629, 633 (9th Cir.2007) (applying the pre- eBay standard, without discussion, in a preliminary injunction trademark case). By contrast, the First, Eleventh, and Fourth Circuits have applied eBay in copyright cases. See CoxCom, Inc. v. Chaffee, 536 F.3d 101, 112 (1st Cir.2008); Peter Letterese & Assocs. v. World Inst. of Scientology Enters. Int'l, 533 F.3d 1287, 1323 (11th Cir.2008); Christopher Phelps & Assocs. v. Galloway, 492 F.3d 532, 543 (4th Cir.2007) (“The Supreme Court [in eBay] reaffirmed the traditional showing that a plaintiff must make to obtain a permanent injunction in any type of case, including a patent or copyright case[.]”); see also Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F.Supp.2d 1197, 1208-10 (C.D.Cal.2007) (extensively discussing the issue and concluding that eBay applies in the permanent injunction copyright context). See generally Voile Mfg. Corp. v. Dandurand, 551 F.Supp.2d 1301, 1306 (D.Utah 2008) (collecting cases and summarizing that “[d]espite the lack of clear direction from the Federal Circuit, the majority of district courts to directly analyze the issue have held that eBay did away with the presumption of irreparable harm in preliminary injunction cases involving patents”).

[7] Indeed, although our holding here is limited to preliminary injunctions in the context of copyright cases, eBay's central lesson is that, unless Congress intended a “major departure from the long tradition of equity practice,” a court deciding whether to issue an injunction must not adopt “categorical” or “general” rules or presume that a party has met an element of the injunction standard. 547 U.S. at 391-94, 126 S.Ct. 1837 (quotation marks omitted). Therefore, although today we are not called upon to extend eBay beyond the context of copyright cases, we see no reason that eBay would not apply with equal force to an injunction in any type of case.

[8] This Court has rarely considered the public's interest before deciding whether an injunction should issue. Although decisions have referenced the public's interest in passing, see Silverstein v. Penguin Putnam, Inc., 368 F.3d 77, 84 (2d Cir.2004) (quoting 4 Nimmer on Copyright § 14.06 for the proposition that “where great public injury would be worked by an injunction ... the courts could ... award damages or a continuing royalty instead of an injunction”); New Era Publ'ns Int'l., ApS v. Henry Holt, Co., 884 F.2d 659, 664 (2d Cir.1989) (Newman, J., dissenting from denial of rehearing in banc) (“[T]he public interest is always a relevant consideration for a court deciding whether to issue an injunction.”), the public's interest has not in the past been a formal factor in this Court's standard for when to issue copyright injunctions.

[9] As Judge Leval noted in New Era Publications International, ApS v. Henry Holt & Co., “the justification of the copyright law is the protection of the commercial interest of the artist/author. It is not to coddle artistic vanity or to protect secrecy, but to stimulate creation by protecting its rewards.” 695 F.Supp. 1493, 1526 (S.D.N.Y.1988).

[10] But cf. Freedman v. Maryland, 380 U.S. 51, 59, 85 S.Ct. 734, 13 L.Ed.2d 649 (1965) (finding permissible pre-adjudication restraint where, among other things, the time between the restraint and the final adjudication is brief).

[11] We find it unnecessary to decide whether Salinger owns a valid copyright in the character Holden Caulfield.

[12] As noted above, since the commencement of these proceedings, Plaintiff-Appellee J.D. Salinger has died. On remand, nothing precludes the District Court from considering that or any other additional evidence that may bear on the legal issues to be determined with respect to the preliminary injunction and the final merits. Moreover, while we are remanding for further consideration of a preliminary injunction, we wish to make clear that nothing we have said is intended to preclude the District Court on remand from consolidating its further consideration of the preliminary injunction application with the trial on the merits. See Fed.R.Civ.P. 65(a)(2).

[1047] Michael P. Norris, Asst. U.S. Atty., Omaha, Neb., for U.S.

Richard J. Dinsmore, Omaha, Neb., for Dennis Moran.

MEMORANDUM AND ORDER

RICHARD G. KOPF, United States Magistrate Judge.

The parties have consented to try this misdemeanor case before me. Trial was held on January 15, 1991, and briefs were received on January 23, 1991. I now find that the defendant is not guilty of the alleged willful infringement of a copyrighted video cassette in violation of 17 U.S.C. § 506(a).

I. FACTS

Dennis Moran (Moran), the defendant, is a full-time Omaha, Nebraska, police officer and the owner of a "mom-and-pop" movie rental business which rents video cassettes of copyrighted motion pictures to the public. On April 14, 1989, agents of the Federal Bureau of Investigation (FBI) executed a court-ordered search warrant on the premises of Moran's business. The FBI seized various video cassettes appearing to be unauthorized copies of copyrighted motion pictures, including "Bat 21," "Big," "Crocodile Dundee II," "The Fourth Protocol," "Hell-Bound: Hellraiser II," and "Mystic Pizza." The parties have stipulated that these six motion pictures are validly copyrighted motion pictures. The parties have further stipulated that each of the six motion pictures was distributed to Moran, with the permission of the copyright holder, between February 1, 1989, and April 14, 1989. The parties have further stipulated that at least one of the movies identified was reproduced by Moran onto a video cassette, without the authorization of the copyright holder, placed into inventory for rental, and subsequently rented.

At the time the FBI executed the search warrant, Moran was fully cooperative. He told the FBI agents he put the "duped" copies out for rental and held the "originals" back because he feared the "original" motion pictures would be stolen or damaged. Moran told the FBI agents at the time they executed the warrant that he believed this practice was legal as long as he had purchased and was in possession of the "original" motion picture. Moran further advised the FBI agents that he would affix to the "duped" copies title labels for the copyrighted motion pictures and a copy of the FBI copyright warning label commonly found on video cassette tapes. Moran [1048] advised the FBI agents that he put the title labels and FBI warning on the tapes to stop customers from stealing or duplicating the tapes.

Moran testified at trial. He indicated that he had been employed as an Omaha, Nebraska, police officer for approximately twenty-two-and-a-half years, including service as a narcotics investigator and as a bodyguard to the mayor of the City of Omaha. Moran has a reputation for honesty among his associates.

Moran testified that he began to "insure" copyrighted video cassettes, meaning that he duplicated copyrighted video cassettes which he had validly purchased from distributors, when he realized copyrighted tapes were being vandalized. Moran testified he was under the impression that "insuring" tapes was legal whereas "pirating" tapes was not. For practical purposes, Moran defined "insuring" versus "pirating" as meaning that he could duplicate a copyrighted tape provided he had purchased the copyrighted tape and did not endeavor to rent both the copyrighted tape and the duplicate he had made. Moran testified that he formulated his belief about "insuring" versus "pirating" when talking with various colleagues in the business and from reading trade publications. However, Moran was not able to specifically identify the source of his information.

There was no persuasive evidence that Moran made multiple copies of each authorized version of the copyrighted material. The evidence indicates that Moran purchased more than one copyrighted tape of the same movie, but the persuasive evidence also reveals that Moran made only one copy of each copyrighted tape he purchased. There was no persuasive evidence that Moran endeavored to rent both the copyrighted tape and the duplicate. When Moran made the unauthorized copy, he put the unauthorized copy in a package made to resemble as closely as possible the package containing the original copyrighted motion picture Moran had purchased from an authorized distributor.

II. LAW

Moran makes two arguments. First, Moran argues that the government must prove that he had the specific intent to violate the law, that is, he knew that what he was doing was illegal and he committed the act nevertheless. Secondly, Moran argues that he did not have the specific intent to violate the law and, as a consequence, should be found not guilty.

In pertinent part 17 U.S.C. § 506(a) punishes as a criminal any "person who infringes a copyright willfully and for purposes of commercial advantage or private financial gain." Pursuant to 17 U.S.C. § 106(3), the owner of a copyright has the exclusive right to "distribute copies . . . of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending." The "exclusive right" of the owner of a copyright is subject to a variety of exceptions. See 17 U.S.C. §§ 107-118.

A.

It must first be determined whether the word "willfully," as used in 17 U.S.C. § 506(a), requires a showing of "bad purpose" or "evil motive" in the sense that there was an "intentional violation of a known legal duty." Adopting the research of the Motion Picture Association of America, the government argues that the term "willful" means only "an intent to copy and not to infringe." Letter Brief of Government at 4 (citing United States v. Backer, 134 F.2d 533, 535 (2nd Cir. 1943); United States v. Taxe, 380 F.Supp. 1010 (C.D.Cal. 1974), aff'd, 540 F.2d 961 (9th Cir. 1976)). On the other hand, Moran argues that the use of the word "willful" implies the kind of specific intent required to be proven in federal tax cases, which is to say, a voluntary, intentional violation of a known legal duty. Defendant's Memorandum Brief at 1 (citing United States v. Cross, 816 F.2d 297, 300-01 (7th Cir. 1987); United States v. Heilman, 614 F.2d 1133, 1137-38 (7th Cir.), cert. denied, 447 U.S. 922, 100 S.Ct. 3014, 65 L.Ed.2d 1114 (1980); United States v. Wise, 550 F.2d 1180, 1194 (9th [1049] Cir.), cert. denied, 434 U.S. 929, 98 S.Ct. 416, 54 L.Ed.2d 290 (1977)).

The general rule is, of course, that ignorance of the law or mistake of the law is no defense to a criminal prosecution. However, when the term "willfully" is used in complex statutory schemes, such as federal criminal tax statutes, the term "willfull" means a "voluntary, intentional violation of a known legal duty." Cheek v. United States, ___ U.S. ___, 111 S.Ct. 604, 610, 112 L.Ed.2d 617 (1991) (holding in a criminal tax prosecution that a good faith misunderstanding of the law or a good faith belief that one is not violating the law negates willfulness, whether or not the claimed belief or misunderstanding is objectively reasonable).^[1] As the Court recognized in Cheek, id. at ___, 111 S.Ct. at 609-611, in United States v. Murdock, 290 U.S. 389, 396, 54 S.Ct. 223, 226, 78 L.Ed. 381 (1933), the Supreme Court said that:

Congress did not intend that a person, by reason of a bona fide misunderstanding as to his liability for the tax, as to his duty to make a return, or as to the adequacy of the records he maintained, should become a criminal by his mere failure to measure up to the prescribed standard of conduct.

This was evidently so because "the proliferation of statutes and regulations has sometimes made it difficult for the average citizen to know and comprehend the extent of the duties and obligations imposed by the tax law." Cheek, ___ U.S. at ___, 111 S.Ct. at 609.

Apparently no case has compared and analyzed the competing arguments, i.e., whether the word "willfully" requires either a showing of specific intent, as suggested by Moran, or the more generalized intent suggested by the government. Indeed, a leading text writer acknowledges that there are two divergent lines of cases, one of which requires specific intent and another which does not. 3 M. Nimmer & D. Nimmer, Nimmer on Copyright, § 15.01 at 15-5 n. 13 (1990) (hereinafter Nimmer). As pointed out by the government, some courts have suggested that "willful" only means an intent to copy, not to infringe. Backer, 134 F.2d at 535; Taxe, 380 F.Supp. at 1017. On the other hand, as suggested by Moran, other courts have seemingly required evidence of specific intent. Heilman, 614 F.2d at 1137-38; Wise, 550 F.2d at 1194. At least two courts have specifically approved jury instructions essentially stating that an act of infringement done "willfully" means an act voluntarily and purposely done with specific intent to do that which the law forbids, that is to say, with bad purpose either to disobey or disregard the law. Cross, 816 F.2d at 300-01; United States v. Rose, 149 U.S.P.Q. 820 (S.D.N.Y. 1966) (quoted in Nimmer, supra, § 15.01 at 15-6 n. 13). None of the cases recognize that there are divergent lines of cases on this point, and none of the cases endeavor to explain why one line of cases is more compelling than the other.

I am persuaded that under 17 U.S.C. § 506(a) "willfully" means that in order to be criminal the infringement must have been a "voluntary, intentional violation of a known legal duty." Cheek, ___ U.S. at ___, 111 S.Ct. at 610. I am so persuaded because I believe that in using the word "willful" Congress intended to soften the impact of the common-law presumption that ignorance of the law or mistake of the law is no defense to a criminal prosecution by making specific intent to violate the law an element of federal criminal copyright offenses. I came to this conclusion after examining the use of the word "willful" in the civil copyright infringement context and applying that use to the criminal statute.^[2] Wise, 550 F.2d at 1188 n. 14 (There is [1050] a general principle in copyright law of looking to civil authority for guidance in criminal cases).

In the civil context there is "strict liability" for infringement, even where the infringement was "innocent." United States v. Bily, 406 F.Supp. 726, 733 (E.D.Pa. 1975) (comparing civil and criminal copyright law). In this connection, a plaintiff in a civil case need not prove actual damages, but rather may seek what are called statutory damages. The term "willful" is used in the context of statutory damages, and it is instructive to compare the definition of the term "willful," as used in the civil context regarding statutory damages, with the definition of the term "willful" used in the criminal context.

In the statutory damage context, a civil plaintiff is generally entitled to recover no less than $250.00 nor more than $10,000.00 per act of infringement. 17 U.S.C. § 504(c)(1). But where the infringement is committed "willfully," the court in its discretion may increase the award of statutory damages up to a maximum of $50,000.00 per act of infringement. 17 U.S.C. § 504(c)(2). On the other hand, in the case of "innocent infringement," if the defendant sustains the burden of proving he/she was not aware, and had no reason to believe, that his/her acts constituted an infringement of the copyright, and the court so finds, the court may in its discretion reduce the applicable minimum to $100.00 per act of infringement. 17 U.S.C. § 504(c)(2). See H.R.Rep. No. 1476, 94th Cong., 2d Sess. at 162-163, reprinted in 1976 U.S.Code Cong. & Admin.News 5659, 5778-79.

As noted text writers have concluded, the meaning of the term "willful," used in 17 U.S.C. § 504, must mean that the infringement was with knowledge that the defendant's conduct constituted copyright infringement. Nimmer, supra p. 6, § 14.04B3 at 14-40.3-14-40.4 (citations omitted). Otherwise, there would be no point in providing specially for the reduction of awards to the $100.00 level in the case of "innocent" infringement since any infringement which was nonwillful would necessarily be innocent.

The circuit courts of appeal which have considered the issue have all adopted Nimmer's formulation with regard to the meaning of the word "willful" for purposes of 17 U.S.C. § 504(c)(2) and statutory civil damages. Cable/Home Communication v. Network Productions, 902 F.2d 829, 851 (11th Cir. 1990); Broadcast Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 236 (5th Cir. 1988); RCA/Ariola Int'l, Inc. v. Thomas & Grayston Co., 845 F.2d 773, 779 (8th Cir. 1988); Fitzgerald Publishing Co., Inc. v. Baylor Publishing Co., Inc., 807 F.2d 1110, 1115 (2d Cir. 1986). In other words, the term "willful," when used in the civil statutory damage statute, has consistently been interpreted to mean that the infringement must be "with knowledge that the defendant's conduct constitutes copyright infringement." Nimmer, supra p. 6, § 14.04B3 at 14-40.3-14-40.4.

There is nothing in the text of the criminal copyright statute, the overall scheme of the copyright laws, or the legislative history to suggest that Congress intended the word "willful," when used in the criminal statute, to mean simply, as the government suggests, an intent to copy. Rather, since Congress used "willful" in the civil damage copyright context to mean that the infringement must take place with the defendant being knowledgeable that his/her conduct constituted copyright infringement, there is no compelling reason to adopt a less stringent requirement in the criminal copyright context. Accordingly, I find that "willfully," when used in 17 U.S.C. § 506(a), means a "voluntary, intentional [1051] violation of a known legal duty."^[3] Cheek, ___ U.S. at ___, 111 S.Ct. at 610.

B.

Having determined that the standard enunciated by the Supreme Court in Cheek, ___ U.S. ___, 111 S.Ct. 604, applies, it is important to recognize that the rule does not require that a defendant's belief that his conduct is lawful be judged by an objective standard. Rather, the test is whether Moran truly believed that the copyright laws did not prohibit him from making one copy of a video cassette he had purchased in order to "insure" against vandalism. In other words, the test is not whether Moran's view was objectively reasonable, but rather, whether Moran truly believed that the law did not proscribe his conduct. Cheek, ___ U.S. ___, 111 S.Ct. at ___. Of course, the more unreasonable the asserted belief or misunderstanding, the more likely it is that the finder of fact will consider the asserted belief or misunderstanding to be nothing more than simple disagreement with known legal duties imposed by the law, and will find that the government has carried its burden of proving knowledge. Id. at ___, 111 S.Ct. at ___.

Most of the government's argument that it proved beyond a reasonable doubt that Moran violated the criminal copyright statute, even if the word "willfully" is defined as Moran suggests, is based upon the assumption that Moran's beliefs must be "objectively" reasonable. As indicated above, Moran's beliefs need not have been objectively reasonable; rather, if Moran truly believed that he was not subject to the copyright laws, then his subjective belief would defeat a finding that he "willfully" violated the statute.

First, I note that I had an opportunity to observe Moran when he testified. Moran struck me as an honest, albeit naive, person. I was left with the definite impression that Moran was befuddled and bewildered by the criminal prosecution.

Second, although Moran is a local police officer of long standing, there is nothing in his background to suggest any particular sophistication about business matters, and there is no evidence to suggest that he has any particular knowledge about the intricacies of the copyright laws. When confronted by FBI agents upon the execution of the search warrant, Moran was entirely cooperative. On the day the search warrant was executed, he told his story in the same way he now tells his story.

Third, Moran said he had heard from others and read in various publications that it was legally appropriate to engage in the practice he called "insuring." Moran could not cite the specific source of his information. In this regard, I note that the copyright laws permit libraries and archives to replace a copyrighted article that is damaged, deteriorated, lost, or stolen, if the library or archives have, after reasonable effort, determined that an unused replacement cannot be obtained at a fair price. 17 U.S.C. § 108(c). While Moran obviously did not operate his business as a library or archives, the government's assertion that the practice of "insuring" is patently unreasonable is belied by the recognition that under certain circumstances certain users of copyrighted materials may lawfully engage in copying activity which is similar to Moran's conduct.

Fourth, Moran testified that he made only one copy of the original motion picture purchased from the authorized distributor. The government doubts his testimony, but offers no persuasive evidence to contradict [1052] it. Moreover, Moran testified that he never rented both the original copyrighted version of the video cassette purchased from the authorized distributor and the copy he made. Instead, he testified that he always held back the original motion picture. Once again, the government doubts this testimony in its brief, but offers no persuasive evidence to the contrary. Furthermore, the evidence indicates that Moran purchased more than one authorized cassette of a particular motion picture, but made only one duplicate for each authorized cassette purchased.

This evidence suggests that Moran was not acting with a willful intention to violate the copyright laws because if he had such an intention it would make absolutely no sense to purchase multiple authorized video cassettes and then make only one duplicate of each authorized cassette. It would have been far simpler, and certainly more lucrative, for Moran to purchase one authorized cassette of a particular motion picture and make multiple copies from the authorized version. In this way Moran would have had to pay only one fee. The fact that Moran seems to have consistently followed the practice of buying an authorized version, but making only one copy of it, suggests that he was acting in accordance with his belief that to duplicate an authorized version in order to "insure it" was lawful so long as only one copy was made and the authorized version and copy were not both rented.

Fifth, the government argues that Moran must have known that what he was doing constituted a copyright infringement because he had before him the FBI warning label and in fact affixed such labels to the unauthorized copies he made. In pertinent part, the FBI warning states, "Federal law provides severe civil and criminal penalties for the unauthorized reproduction, distribution or exhibition of copyrighted motion pictures and video tapes" (emphasis added). Moran explained that he thought these warning labels applied to the renting public, not to him. The use of the word "unauthorized" on the warning label suggested to Moran that vendors who had purchased an authorized version were not subject to the legal restrictions expressed in the warning to the extent that the practice of "insuring" was legal. As Moran suggests, the FBI warning label does not specifically address the claim of legality professed by Moran. Accordingly, Moran's failure to heed the warning label is not determinative.

Sixth, the government further argues that Moran's effort to place the unauthorized copy into a video cassette package displaying a label on its spine and an FBI warning label suggests a sinister motivation. I disagree. Moran's testimony, as I understood it, indicated that when he made a copy he endeavored to make the duplicate look like the original in all respects. After all, the whole purpose of the practice of "insuring" was to use the unauthorized copy in lieu of the original when renting to the public. It was perfectly consistent with Moran's view of the law to make the unauthorized copy look as nearly as possible like the authorized version.

In summary, when Moran's actions were viewed from the totality of the circumstances, the government failed to convince me beyond a reasonable doubt that Moran acted willfully. Moran is a long-time street cop who was fully cooperative with law enforcement authorities. He is obviously not sophisticated and, at least from the record, his business operation of renting movies to the public was not large or sophisticated. Rather, Moran's business appears to have been of the "mom-and-pop" variety. Moran's practice of "insuring," while obviously shifting the risk of loss from Moran to the copyright holder, was conducted in such a way as not to maximize profits, which one assumes would have been his purpose if he had acted willfully. For example, Moran purchased multiple authorized copies of the same movie, but he made only one unauthorized copy for each authorized version purchased. This suggests that Moran truly believed that what he was doing was in fact legal. I therefore find Moran not guilty.^[4]

[1053] IT IS ORDERED that the Clerk of the United States District Court for the District of Nebraska shall, pursuant to Federal Rule of Criminal Procedure 32(b)(1), enter judgment in favor of the defendant, Dennis Moran, and against the United States of America on the court's finding that the defendant is not guilty.

[1] In other circumstances, the Supreme Court has also derived from the word "willfully" a requirement of specific intent. Screws v. United States, 325 U.S. 91, 101, 65 S.Ct. 1031, 1035, 89 L.Ed. 1495 (1945) (construing 18 U.S.C. § 242, dealing with violations of civil rights, as requiring specific intent in a federal criminal prosecution of local law enforcement officers who arrested a black for a state offense and then wrongfully beat him to death).

[2] The legislative history regarding the use of the word "willful" in the statutes criminalizing copyright infringement is not helpful. It has been a criminal offense to willfully infringe a copyright for profit since at least 1909. Copyright Act of 1909, ch. 320, 35 Stat. 1082 at § 28. With the exception of inserting the phrase "for purposes of commercial advantage or private financial gain" for the word "profit," a change thought not to be material, Nimmer, supra p. 6, § 15.01 at 15-1 n. 1, the present statute is nearly identical to the 1909 statute. 17 U.S.C. § 506(a) (1976). The legislative history of the 1976 revision of the criminal statute does not explain what Congress meant by the use of the word "willful." H.R.Rep. No. 1476, 94th Cong., 2d Sess. at 163-164, reprinted in 1976 U.S.Code Cong. & Admin.News 5659, 5779-80.

[3] The Manual of Model Criminal Jury Instructions for the District Courts of the Eighth Circuit, Instruction 7.02 at 291 (1989 Revised Edition) (West 1990) (hereinafter Manual), suggests that no instructions are recommended regarding the term "willfully" except in criminal tax cases and odometer fraud cases. The reason for this suggestion is that in most cases, as the Manual suggests, the words "voluntarily and intentionally" replace the word "willfully." Id. The Manual recognizes that in tax cases and odometer fraud cases "willfully" should be defined as, "An act is done 'willfully' if done voluntarily and intentionally with the purpose of violating a known legal duty." Id. (citations omitted). However, as the committee comments to the Manual suggest, there may be other statutes in which "willfully" requires specific intent. Id. This is one of those cases.

[4] At the close of the government's case, Moran moved for judgment of acquittal. I took his motion under advisement. Moran then offered evidence. Based upon the evidence submitted by the government and the evidence submitted by Moran, I find Moran not guilty in my capacity as a finder of fact. Therefore, I need not rule, and do not decide, whether the motion for acquittal should have been granted.