Free Findings of Fact & Conclusions of Law - District Court of Arizona - Arizona

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Case 2:04-cv-00621-SRB Document 277 Filed 08/23/2006 Page 1 of 24

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

Dan Coogan, doing business as Coogan) ) Photographic, ) ) Plaintiff, ) ) vs. ) ) Avnet, Inc., a foreign corporation; Roy) Vallee and Jane Doe Vallee, husband and) wife; Allen Maag and Jane Doe Maag,) ) husband and wife, ) ) Defendants. ) )

No. CV-04-0621-PHX-SRB ORDER

This case involves Defendant Avnet, Inc.'s ("Avnet") willful copyright infringement of photographs taken by Plaintiff Dan Coogan. Beginning on July 18, 2006, the Court conducted a five-day bench trial. In light of the Court's rulings prior to trial (Doc. 100), the Court's rulings from the bench on July 21, 2006 (Doc. 270), and Plaintiff's election of statutory damages (Doc. 269), the sole issue is to determine the value of Plaintiff's single statutory damage award. Having considered the evidence received at the trial, together with the arguments of counsel, the Court makes the following findings of fact and conclusions of law. FINDINGS OF FACT 1. Avnet is a Fortune 500 company with more than 11,000 employees.

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2.

Plaintiff is a professional photographer who was retained by Upside Magazine ("Upside") to photograph Avnet Chief Executive Officer Roy Vallee.

3.

The photo shoot of Vallee occurred in April 2001. Plaintiff did not obtain a model release from Vallee.

4.

Following the April 2001 photo shoot, Plaintiff registered the photographs as an unpublished "collection" with the United States Copyright Office.

5.

Under the terms of Plaintiff's agreement with Upside, the magazine could use one Vallee photograph in its July 2001 issue. A Vallee photograph1 did appear in the July 2001 issue, but Upside went bankrupt and never paid Plaintiff.

6.

Al Maag, Avnet's Chief Communications Officer, saw the photograph and received what he believed to be permission from Upside's editor-in-chief to use it. Apparently, Upside transmitted the photograph to Avnet in the form of a bromide, which Plaintiff described as an eight inch by ten inch print mounted on foam.

7.

Avnet scanned the photograph and used it in the June 27, 2001 issue of "Avnetink Online," an email newsletter distributed to approximately 8,000 employees, 100 stock analysts, Avnet's public relations firm, and certain journalists who follow the industry.

8.

Avnet also used the photograph in the two 2001 editions of Avnet Global Perspective Magazine ("AGP"), an internal, Avnet employee relations magazine with a circulation of approximately 16,000. AGP is mailed only to Avnet employees, and there is no evidence that it is distributed to third parties.

9.

In October 2001, Plaintiff saw one of the Vallee photographs in AGP and informed Sean Fanning, an Avnet employee, that he had not been paid by Upside for the Vallee photo shoot and that Avnet was not authorized to use the photographs. Fanning referred Plaintiff to Maag, and following a brief telephone conversation, the two exchanged emails over roughly a four month period.

Between 2001 and 2005, Avnet infringed Plaintiff's copyright with respect to three photographs of Vallee. Throughout this Order, the Court will refer to those photographs as the "Vallee photographs" and will not differentiate between individual photographs. -2Document 277 Filed 08/23/2006 Page 2 of 24

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10.

The first email from Plaintiff to Maag, dated January 10, 2002, adverts to the unauthorized use of one of the Vallee photographs in AGP, and inquires whether, in addition to compensation for the unauthorized use, Avnet would like to purchase the future use of some of the Vallee photographs. That email also states that the licensing fee for the two uses in AGP would have been $850 if negotiated in advance.

11.

Maag responded by email on January 18, inquiring as to the cost of purchasing all of the Vallee photographs. Plaintiff answered that it would be more cost effective for Avnet to license select images for a finite period of time, rather than purchasing all of the photographs outright. Maag was apparently amenable to that suggestion, and the two met in person on March 6, 2002.

12.

At that meeting, Plaintiff and Maag reached an oral agreement concerning the past and future use of the Vallee photographs. In an email to Maag later that day, Plaintiff described the terms of the agreement: A two-year license of the photographs to Avnet for $2,500. That agreement did not include a promise by Maag of future work for Plaintiff.

13.

In the same email, Plaintiff attempted to withdraw from the original agreement and renegotiate. Plaintiff proposed a two-year license for $5,000. Maag responded by offering $2,500 for a one-year license of the photographs, in which Avnet could use the photographs "as we see fit. . . . If used by a publication outside the industry we serve I will pay you a $500 fee."

14.

The precise sequence of events at this point is unclear. Plaintiff responded on March 13, 2002 with a counter offer: $3,750 for a one-year license, or $2,500 with a written guarantee to shoot the 2003 Avnet Annual Report.

15.

The next email in the record from Plaintiff to Maag is almost one month later, on April 10, 2002, in which Plaintiff "agreed that our agreement was probably, in the end, the best decision that could be made for both of us."

16.

To that email was attached an invoice (the "Invoice", "License" or "Agreement"), dated April 9, 2002, that purportedly set forth the terms of the agreement. The -3Document 277 Filed 08/23/2006 Page 3 of 24

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Invoice provided that Avnet would pay Plaintiff $2,500 in exchange for the prior use of one of the Vallee photographs in two issues of AGP, and "[a]n additional 3-5 images from the same photo shoot licensed for one year non-exclusive use in Avnet publications (excluding the annual report)." The Invoice further provided that the rights to the images could not be transferred to third parties. The Invoice did not compensate Plaintiff for the unauthorized use of the Vallee photograph in the June 2001 issue of Avnetink Online. Maag testified that he forgot to inform Plaintiff at the time of the negotiation about that use. Apparently accompanying the Invoice was a one page document entitled "Terms and Conditions," though neither the email nor the Invoice make any reference to that document, and it contains terms that were never discussed by Plaintiff and Maag. As will be discussed below, those terms and conditions are not part of the agreement between Plaintiff and Avnet. Maag forwarded the Invoice to Avnet's accounting department, which paid it in full. In response to a request for admission, Avnet admitted that the check was issued to Plaintiff for payment of the Invoice, and "constitutes a writing accepting the terms set forth in the [I]nvoice." The Court does not interpret that admission to extend to the Terms and Conditions page, as it is not part of the Invoice. Avnet did not follow the terms of the Invoice. At the summary judgment stage, Maag submitted an affidavit stating that he simply forgot about the Invoice. The Court ruled that Avnet's conduct amounted to willful copyright infringement. Infringements 21. The parties agree that the use of the Vallee photographs in the following contexts constitutes copyright infringement: One issue of Avnetink Online.

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· ·

Three editions of AGP.2 Three issues of "This Week at Avnet," an Avnet email publication sent to 8,000 Avnet employees, including the Board of Directors, and possibly to three outside contractors. Copies of the newsletters were archived on Avnet's site until February 2005.

·

2002 and 2003 Avnet Annual Reports. The print edition of the 2002 Annual Report was available from October 2002 through October 2005. The online edition of the 2002 Annual Report containing a Vallee photograph was available from October 2002 through February or March 2004. The print edition of the 2003 Annual Report was available from October 2003 through October 2005. The online edition of the 2003 Annual Report containing a Vallee photograph was available from October 2003 through February or March 2004.

· ·

Two locations on Avnet's website: The first location is on the homepage, though the parties dispute the length of time that one of the Vallee photographs appeared there. Avnet argues that a Vallee photograph appeared between February 5, 2004 and February 25, 2004. Plaintiff called a witness, Michael Norton, who testified that, at Plaintiff's request, he visited the Avnet.com homepage in the fall of 2005 and may have seen one of the Vallee photographs.3 Given Norton's uncertainty and what the Court believes to be his bias

Avnet's use of the Vallee photographs in AGP during the license period does not constitute infringement because AGP is an "Avnet publication" within the meaning of the Invoice. The record on this point is unclear. First, the witness told Plaintiff's counsel that he visited the Avnet.com website in the fall of 2005. Then, Plaintiff's counsel presented the witness with a printout of Avnet's website from 2004 containing one of the Vallee photographs, though that printout was never admitted into evidence. The witness was asked, "Was Mr. Vallee's picture on it as we see here?" He replied, "I don't remember if it was exactly this." That response could be taken to mean that Norton saw a photograph of Vallee but was uncertain whether that photograph had been taken by Plaintiff. That response could also mean that the photograph in 2005 was of an individual who may or may not have been -5Document 277 Filed 08/23/2006 Page 5 of 24
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in Plaintiff's favor, the Court rejects Norton's testimony and concludes that a Vallee photograph appeared on Avnet's homepage until the end of February 2004. The second location on Avnet's website is in the Press Room, where the Vallee photographs were available for free download between August 28, 2002 and February 25, 2004.4 One issue of CRN Magazine, in both electronic and printed form. Governor's Council on Innovation and Technology ("GCIT") website between April 2003 and December 2005. Supply Chain Council newsletter announcement and seminar brochure, available in both printed form and on Supply Chain website. Brochure for conference hosted by Morgan Stanley. The photograph may have been downloaded from Avnet's website and used by azcentral.com and Channel Web. The parties disagree as to whether other uses of the photographs were infringements. One argument Plaintiff makes is that when Avnet violated the terms of the License during the year that it was in effect, the License was voided or rescinded and all other uses of the Vallee photographs during that year were infringements. For reasons to be discussed below, Plaintiff is incorrect. As a result, the following uses of the Vallee photographs were not infringements: Avnet 50th anniversary card given to Vallee in 2003. Two appearances in "This Week at Avnet" in 2003. Two issues of AGP, one in 2002, the other in 2003.

Vallee. Plaintiff's counsel never clarified the ambiguity. The Court declines to construe that ambiguity as evidence that one of the Vallee photographs was on the homepage in the fall of 2005. There was no reliable evidence presented as to how many visitors Avnet's homepage received while it contained a Vallee photograph. Nor was there reliable evidence as to how many people downloaded one of the Vallee photographs from the Press Room, though the number apparently did not exceed 162. -6Document 277 Filed 08/23/2006 Page 6 of 24
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22.

Plaintiff has also argued that various uses of the Vallee photographs during the license period constituted infringements because Avnet cropped and altered the images, which it was allegedly not permitted to do under the terms of the license. The Invoice itself does not bar Avnet from cropping or altering the images, but the Terms and Conditions page attached to the Invoice does. However, as will be discussed below, that page is not part of the Agreement, and therefore, otherwise permissible uses of the photographs are not rendered impermissible by virtue of any language in the Terms and Conditions page.

23.

At no point, either during or after the License was in effect has Avnet sold any of the Vallee photographs to third parties.

Events Leading Up to the Lawsuit 24. On February 24 or 25, 2004, Maag received a letter from Plaintiff's counsel (the "February 2004 letter") informing him that Avnet was violating the terms of its agreement with Plaintiff, and was infringing the copyright he held on the Vallee photographs. 25. Upon receiving the letter, Maag testified that he informed his staff to "immediately remove the pictures." Emails Maag sent to Avnet employees around this time, emails between Avnet employees, and the testimony of Bryan Carter, an Avnet employee who was then responsible for helping to manage Avnet's website, corroborate Maag's testimony. For example, Carter testified that he and two other staff members "immediately . . . scoured everywhere we knew the photos would exist . . . and remove[d] them . . . from public access." 26. During this "scouring," all but three of the Vallee photographs were removed from Avnet's website. The exceptions are three issues of This Week at Avnet, which remained archived on Avnet's website until February 2005. 27. The "scouring" performed by Avnet employees was deficient in two other respects. First, a Vallee photograph remained on the GCIT website until December 2005. Second, Avnet continued to distribute printed versions of the 2002 and 2003 Avnet -7Document 277 Filed 08/23/2006 Page 7 of 24

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Annual Reports until October 2005. There was no evidence at trial as to how many of those annual reports were distributed following Avnet's receipt of the February 2004 letter, nor was there an explanation given as to why the Vallee photographs were not removed from these locations. With respect to the GCIT website, the Court concludes that Avnet simply forgot about the fact that it had supplied one of the Vallee photographs to GCIT. Avnet had made such extensive use of the Vallee photographs, including distributing them to multiple third parties that when Maag ordered his staff to remove the photographs, there was no recollection that one of the photographs had been sent to GCIT. With respect to the annual reports, the Court concludes that Avnet knew that the Vallee photographs remained in the print edition, but chose not to remove or cover them.5 It is inconceivable that Avnet remembered to remove the Vallee photographs from the electronic versions of the annual reports, but forgot to remove them from the printed editions. Rather, Avnet likely balanced the cost and inconvenience of reprinting or removing the Vallee photographs against what it perceived to be the trifling matter of infringing on Plaintiff's copyright. It is unknown which Avnet employee made this decision, though Maag must have either explicitly or tacitly approved of it. Maag was and is Avnet's Chief

Communications Officer and had ultimate responsibility over the use of the Vallee photographs and over the content of Avnet's annual reports. As such, the decision of whether to ignore the presence of the Vallee photographs in the 2002 and 2003 Annual Reports could not have been made without Maag's knowledge or, more likely, his approval.

Curiously, Plaintiff's counsel did not explore this issue during trial. He did not ask Maag whether he approved of the decision to permit distribution of the 2002 and 2003 Annual Reports even after the February 2004 letter. Plaintiff's counsel did not ask any questions concerning whether Avnet chose to permit distribution of those annual reports as a cost saving measure. -8Document 277 Filed 08/23/2006 Page 8 of 24

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31.

The timing of the annual reports is also noteworthy. The 2002 and 2003 Annual Reports became available in October of their respective years, which means that the 2004 Annual Report did not become available until October 2004. It is therefore reasonable to infer that from February 2004 through October 2004, Avnet's most recent annual report was the one containing the Vallee photographs. It was not until October 2005, more than sixteen months after Avnet was served with this lawsuit, that distribution of the annual reports containing the infringing photographs ceased.

32.

Maag admitted that he "screwed up" by failing to adhere to the terms of the Invoice, and he apologized to Plaintiff. The Court doubts the sincerity of Maag's apology.

33.

First, it is baffling that Maag, an individual who, by his own admission, regularly works with copyrighted material, had no system in place to ensure that the terms of the Invoice were respected.6

34.

Second, Maag's apology was incomplete. He apologized for his forgetfulness but not his intentional conduct, which was to permit the continued distribution of the 2002 and 2003 Annual Reports after having been informed that to do so would violate Plaintiff's copyright.

Expense Saved by Avnet as a Result of the Infringements: Avnet's Evidence 35. Avnet's evidence can be broken down into five categories: negotiations between Plaintiff and Maag leading up to the Agreement; prior agreements between Plaintiff and Avnet; agreements between Plaintiff and other clients; agreements between Avnet Maag testified that, in his thirty years of working with photographers, "99.9 percent" of the time, his practice was to purchase photographs outright, so that he, or the company for which he was working, could use the photographs for any purpose and for any period of time. Perhaps through this testimony, Maag was attempting to justify Avnet's infringements by suggesting that he was so unaccustomed to purchasing licenses that he took no steps to ensure that the terms of the Invoice were respected. That justification, even if it were true, is insufficient. Alleged inexperience with licenses is not an excuse for violating them, especially when the person responsible for the violation negotiated the license. Also, Maag testified that he was familiar with the notion of licensing photographs for limited purposes such as public relations use. He should have developed a practice of informing the employees who would actually be working with the images as to the restrictions on their use. -9Document 277 Filed 08/23/2006 Page 9 of 24
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and other photographers; and the cost to Avnet to have new photographs of Vallee taken. With respect to the negotiations between Plaintiff and Maag, Plaintiff stated in an email that the license fee for the first two uses in AGP would have been $850 if negotiated in advance. At the meeting between Plaintiff and Maag, Plaintiff agreed to license the images to Avnet for two years for $2,500, though Plaintiff reneged on that agreement. Following their meeting, Plaintiff offered to license the Vallee photographs to Avnet for two years for $5,000, with only one restriction: the photographs could not be provided to magazines such as Forbes, Fortune and Business Week. Later in the negotiations, Plaintiff offered to charge Avnet $3,750 to use the Vallee photographs for one year. In the Invoice, Plaintiff agreed to license the Vallee photographs to Avnet for one year for $2,500, with certain restrictions (though those restrictions were not mentioned in the email). With respect to prior agreements between Plaintiff and Avnet, in July 2001, Plaintiff photographed an Avnet meeting. He charged Avnet $600 for a one-year license to use the photographs for internal and public relations uses. In October 2001, Plaintiff conducted a photo shoot of Andy Bryant, an Avnet executive. Plaintiff charged Avnet $3,000 for a two-year license that included "nonexclusive public relations and internal employee publications and internet rights only." With respect to agreements between Avnet and other photographers, Avnet offered extensive evidence: John Trotto is a Phoenix-based photographer. From 2003 to 2005, he charged Avnet between $750 and $1,500 for photo shoots of its executives that included providing Avnet with all usage rights.

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·

Another commercial photographer, David Schmidt, charged Avnet about $2,200 to photograph the Avnet Board of Directors for the 2000 Annual Report and "any public relations usages."

·

Sparks Designs is an agency that employs photographers who have performed photo shoots for Avnet. Between 2001 and 2002, Sparks Designs photographed several Avnet executives and charged Avnet about $500 for each individual photographed. That price included unlimited usage rights.

·

Sparks Designs provided Avnet with a price quotation of $1,600 for a Vallee photo shoot in March 2004 that included all rights to the photographs.

43.

Avnet also offered extensive evidence of agreements between Plaintiff and other clients:

·

On two separate occasions, Plaintiff photographed two individuals for use in Computerworld magazine. On each occasion, Plaintiff charged the magazine $500 for one-time publication of the photographs in the print edition, and $175 for "internet and international use."

·

Plaintiff charged Computerworld $250 to photograph two individuals for one-time use in the print edition of its magazine.

·

Plaintiff charged an individual $750 to use a photograph ten times in a newspaper column.

· · ·

Plaintiff charged TIME Magazine $300 for the one-time use of a stock photograph. Plaintiff charged Glendale Magazine $225 for the one-time use of a stock photograph. Plaintiff charged VarBusiness Magazine $900 to photograph an Avnet executive for one-time use in its magazine. Plaintiff later charged the magazine $200 to re-use the photograph in another issue of its magazine.

44.

On cross-examination, Plaintiff refused to provide a clear answer to questions by defense counsel as to the fees he would have charged Avnet for use of the Vallee photographs had Avnet attempted to negotiate their use in advance.

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Expense Saved by Avnet as a Result of the Infringements: Plaintiff's Evidence 45. 46. Plaintiff's evidence consisted solely of the testimony of his expert, Richard Weisgrau. Weisgrau is an author of numerous books and articles on the business side of photography. He is the former executive director of the American Society of Media Photographers ("ASMP"), an organization that "protects and promotes the interests" of commercial photographers. 47. Weisgrau estimated Plaintiff's actual damages to be $351,795, a number based on the assumption that the Agreement was not automatically voided or rescinded as soon as Avnet violated its terms. 48. For reasons that will be discussed below, the Court gives no weight to Weisgrau's opinion. CONCLUSIONS OF LAW 1. 2. The sole question is the amount of statutory damages to which Plaintiff is entitled. With respect to statutory damages, the Copyright Act provides, (1) . . . [T]he copyright owner may elect . . . to recover . . . an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any infringer is liable individually . . . in a sum of not less than $750 . . . as the court considers just. . . . (2) In a case where the copyright owner sustains the burden of proving . . . that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. 17 U.S.C. § 504(c). 3. At the summary judgment stage, the Court ruled that the Vallee photographs constitute one "work" within the meaning of the Copyright Act. 4. Therefore, Plaintiff is entitled to only one award of statutory damages. Plaintiff does not appear to have argued that he is entitled to one award for each infringement. Indeed, such an argument is foreclosed by Columbia Pictures Television v. Krypton - 12 Document 277 Filed 08/23/2006 Page 12 of 24

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Broad. of Birmingham, Inc., 106 F.3d 284, 294 (9th Cir. 1997), rev'd sub. nom. Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998), remanded to 259 F.3d 1186 (9th Cir. 2001), which held, in relevant part, that "when statutory damages are assessed against one defendant . . . , each work infringed may form the basis of only one award, regardless of the number of separate infringements." (citation omitted).7 See also BMG Music v. Perez, 952 F.2d 318, 320 (9th Cir. 1990) (affirming award of $15,000 per work for infringement of copyrighted material); Walt Disney Co. v. Powell, 897 F.2d 565, 569 (D.C. Cir. 1990) ("Both the text of the Copyright Act and its legislative history make clear that statutory damages are to be calculated according to the number of works infringed, not the number of infringements."). See, e.g., Warner Bros. Entm't, Inc. v. Caridi, 346 F. Supp. 2d 1068, 1074 (C.D. Cal. 2004) (awarding the plaintiff one award of statutory damages per work infringed); Sega Enters. Ltd. v. MAPHIA, 948 F. Supp. 923, 940 (N.D. Cal. 1996) (same). "The court has wide discretion in determining the amount of statutory damages, constrained only by the specified maxima and minima." Harris v. Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir. 1984). "In measuring damages, the court is to be guided by 'what is just in the particular case, considering the nature of the copyright, the circumstances of the infringement, and the like. . . .'" Peer Int'l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336 (9th Cir. 1990) (quoting F.W. Woolworth v. Contemporary Arts, 334 U.S. 228, 232 (1952)). Courts have considered several factors in determining what award is just: "the expense saved by the defendant in avoiding a licensing agreement; profits reaped by the defendant in connection with the infringement; revenues lost to the plaintiff; . . .

Following reversal by the Supreme Court on other grounds, the Ninth Circuit made clear that this holding remained good law: "Thus, under the Copyright Act, 'each work infringed may form the basis of one award.'" Columbia Pictures, 259 F.3d at 1193 (quoting Columbia Pictures, 106 F.3d at 294) (emphasis in post-remand case). - 13 Document 277 Filed 08/23/2006 Page 13 of 24

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the willfulness of the infringement[;] . . . [and] the goal of discouraging wrongful conduct." Controversy Music v. Shiferaw, 2003 WL 22048519, at *2 (N.D. Cal. July 7, 2003) (citations omitted). See Chi-Boy Music v. Charlie Club, Inc., 930 F.2d 1224, 1229 (7th Cir. 1991) ("[D]istrict courts enjoy wide discretion in awarding fees and may consider various factors such as 'the difficulty or impossibility of proving actual damages, the circumstances of the infringement, and the efficacy of the damages as a deterrent to future copyright infringement."); Jackson v. Sturkie, 255 F. Supp. 2d 1096, 1102 (N.D. Cal. 2003) ("In determining the appropriate amount of statutory damages, the court should be guided by what is just in a particular case, considering the nature of the copyright, the circumstances of the infringement, and the like.") (internal quotation marks omitted); Columbia Picture Indus. v. T & F Enters., 68 F. Supp. 2d 833, 840 (E.D. Mich. 1999) (listing factors). Another consideration is "whether a defendant has cooperated in providing particular records from which to assess the value of the infringing material produced." Fitzgerald Publ'g Co. v. Baylor Publ'g Co., Inc., 807 F.2d 1110, 1117 (2d Cir. 1986); Sony Computer Entm't Am., Inc. v. Filipiak, 406 F. Supp. 2d 1068, 1075 (N.D. Cal. 2005); Warner Bros., 346 F. Supp. 2d at 1074. Plaintiff seeks the maximum statutory award of $150,000. The Court will consider each of the relevant factors in turn.

Expense Saved by Avnet and Profit Lost by Plaintiff 11. There is no dispute that Avnet saved money as a result of its infringements. Whereas Avnet paid for a one-year license of the Vallee photographs, it made use of those photographs for far longer. The determination of how much money Avnet saved turns on "what a willing buyer would have been reasonably required to pay a willing seller for [the owner's] work" at the time of the infringement. Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 707 (9th Cir. 2004); Mackie, 296 F.3d at 914. That is, the fair market value of the photographs based on their use by Avnet must be determined. - 14 Document 277 Filed 08/23/2006 Page 14 of 24

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13.

Helpful in this regard are: negotiations between Plaintiff and Maag leading up to the Agreement; prior agreements between Plaintiff and Avnet; agreements between Plaintiff and other clients; agreements between Avnet and other photographers; and the cost to Avnet to replace the Vallee photographs. See, e.g., On Davis v. The Gap, Inc., 246 F.3d 152, 161 (2d Cir. 2001); Baker v. Urban Outfitters, Inc., 254 F. Supp. 2d 346, 359 (S.D.N.Y. 2003) ("[P]ast licensing can serve as a benchmark for measuring the fair market value of a reasonable license fee for the Photograph."). All of these figures are discussed above in the Court's Findings of Fact.

14. 15.

The Court concludes that Avnet saved, at the very most, $15,000. During Plaintiff's negotiations with Maag, Plaintiff initially agreed to a two-year license for $2,500. There is no mention in Plaintiff's email to Maag of any limitations on the use of the photographs during those two years. Assuming that Avnet had obtained a four-year license, it would have cost $5,000. That is one possible calculation of Avnet's savings as a result of its infringement.

16.

Other possible calculations can be drawn from the same negotiations. As discussed above, Plaintiff reneged on the two-year, $2,500 deal and Maag expressed willingness to renegotiate. Plaintiff offered $5,000 for two years, with the only limitation being that Avnet could not provide the photographs to major magazines but would have to refer them to Plaintiff. If Maag had responded with an offer of $10,000 for four years, it is likely that Plaintiff would have accepted.

17.

During the same negotiations, Plaintiff also offered Avnet a one-year license for $3,750. If Maag had responded with an offer of $15,000 for four years, it is once again likely that Plaintiff would have accepted. This is a third plausible calculation.

18.

A fourth possibility is the Invoice itself, in which Avnet agreed to pay $2,500 for a one-year license that included use in public and employee relations but excluded use in annual reports. It is likely that if Maag had offered Plaintiff $10,000 for a four-year license, plus another $5,000 to use the photographs in the annual reports, Plaintiff would have accepted. - 15 Document 277 Filed 08/23/2006 Page 15 of 24

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19.

So while it is impossible to state with certainty what the exact agreement for a fouryear license would have been, that amount would not have exceeded $15,000. All of the evidence concerning other agreements between Plaintiff and Avnet, other agreements between Plaintiff and his clients, other agreements between Avnet and photographers, all support the fact that a $15,000 fee for a four-year license is, at the very minimum, reasonable, and more realistically, a very generous estimate. Indeed, Sparks Productions quoted a price of $1,600 for a photo shoot of Vallee that included unlimited, indefinite use of the photographs. It is not unreasonable to assume that if Avnet had contacted Sparks Productions in 2001 instead of Plaintiff, Sparks would have offered the same price at that point.

20.

It is perhaps possible that Avnet saved additional money by choosing not to reprint all of the 2002 and 2003 Annual Reports containing the Vallee photographs. However, Plaintiff presented no evidence whatsoever on this point. For example, Plaintiff did not offer evidence as to: how much Avnet spent in 2002 and 2003 to have the annual reports printed; how many annual reports were printed in those years; what time of year the reports are distributed; if there is an initial distribution, how many reports are distributed after that time; the extent that the 2002 Annual Report is distributed once the 2003 Annual Report is released; the extent that the 2003 Annual Report is distributed once the 2004 Annual Report is released; whether it would have been possible to reprint part of an annual report; and whether it would have been possible to cover the Vallee photographs and not have to reprint the reports. These are just some examples of evidence that may have been useful in determining how much money Avnet saved by continuing to infringe. It is Plaintiff's burden to show damages, and as he presented no evidence on this issue, Avnet's savings related to the annual reports cannot play a role in determining the appropriate statutory award.

21.

The bulk of Weisgrau's testimony was devoted to the issue of how the value of the Vallee photographs should be calculated based on Avnet's use of those photographs. - 16 Document 277 Filed 08/23/2006 Page 16 of 24

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To calculate the value, Weisgrau did the following: first, he ascertained all of the infringing activities; second, he obtained an approximate value of each infringed photograph by consulting the Getty website, which sells stock photography; and third, he multiplied each value by three because the photographs are proprietary as opposed to generic. The total value, according to Weisgrau, is $351,795, a figure that correctly8 assumes that the License was not voided or rescinded as soon as Avnet breached it. Weisgrau admitted that his calculation was not based on "what a willing buyer would have been reasonably required to pay to a willing seller for [the owner's] work." Mackie, 296 F.3d at 914. Weisgrau did not take into account what Plaintiff previously charged other clients for the use of his photographs. Weisgrau did not take into account the offers Plaintiff made to Maag during the negotiations for the License. For example, he did not take into account Plaintiff's statement that, if asked in advance, he would have licensed two uses of one of the Vallee photographs in AGP for $850. Weisgrau calculated the value of such a license at $6,720. Weisgrau did not take into account what Avnet paid other photographers for similar services. Weisgrau did not take into account what other photographers generally bill their clients for similar services.

Plaintiff has argued (without providing any authority) that the License was immediately and automatically rescinded as soon as Avnet breached it, and therefore, all use of the Vallee photographs during the remainder of the one-year license term constituted copyright infringement. That is incorrect. There is nothing in the License itself providing that it is rescinded automatically upon breach, nor is there language that permits Plaintiff to rescind the contract upon breach, nor did Plaintiff make any attempt to communicate to Avnet during the term of the License that he wished to rescind it in light of Avnet's breach. - 17 -

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27.

Indeed, Weisgrau admitted, in response to a hypothetical posed by defense counsel that if he was working for a company interested in purchasing photographs, he would never recommend that photography be purchased for the prices that he had placed on the Vallee photographs.

28.

Weisgrau valued the Vallee photograph given to and used by GCIT on its website at $51,480, yet he admitted that he would not expect GCIT, which is a non-profit organization, to even be capable of paying that amount.

29.

Weisgrau applied a multiplier of three to the estimated value of each infringement, despite the fact that such a multiplier had never even come up in Plaintiff's negotiations with Avnet. Nor was there evidence, for that matter, that Plaintiff had ever charged any of his clients a multiplier. Nor was there evidence that Avnet had ever paid, or been asked to pay, a multiplier when purchasing "proprietary photographs."

30.

Because Weisgrau's opinion is not based on "what a willing buyer would have been reasonably required to pay to a willing seller for [the owner's] work," his opinion is rejected.

31. 32.

In sum, Avnet saved, at most, $15,000 by infringing on Plaintiff's copyright. A related question is whether Avnet's infringement had a detrimental effect on the market value of the Vallee photographs. See Mackie, 296 F.3d at 917 (quoting Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 512 (9th Cir. 1985)); 3 M. Nimmer & D. Nimmer, Nimmer on Copyright § 14.02[A] (1989).

33.

In other words, if Avnet had not infringed Plaintiff's copyright, how much money could Plaintiff have obtained for those photographs if he had attempted to sell or license them on the open market?

34.

The answer, based on the evidence in the record, is none.

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35.

As noted above, Plaintiff did not obtain a model release from Vallee.9 According to Weisgrau, the failure to obtain a model release reduces the value of a photograph "because of concern by the photographer that either the photographer will face a claim by the model or the photographer's buyer will face a claim by the model [for] invasion of privacy."

36.

Plaintiff submitted no evidence that, in spite of his failure to obtain a model release, he could have sold the Vallee photographs. He submitted no evidence that, with other photographs he has taken, he has been able to sell them despite not having obtained a model release. He did not call other photographers to testify that money can still be made from photographs in which the model has not consented to the photograph's sale. Plaintiff's expert witness, Weisgrau, did not testify as to the value of a photograph when the model in that photograph had not authorized the sale or license of the photograph, other than to say that obtaining a release is important and the failure to obtain a release reduces the value of the photographs. Weisgrau did not opine as to the reduction in value of the Vallee photographs as a result of the failure to obtain a release.

In Plaintiff's email to Maag on April 10, 2002, Plaintiff informs Maag that he has agreed to offer Avnet a one-year license for $2,500. The email states, "Attached is the invoice for the use of the photographs. If you can approve it and forward it to accounting for processing that would be great." Apparently accompanying the Invoice was a separate "Terms and Conditions" page that states, in relevant part, "Photographer is not responsible for obtaining model . . . releases in connection with any of the photographs licensed herein. . . ." Neither Plaintiff's email nor the Invoice itself makes reference to the Terms and Conditions page. Neither the terms and conditions themselves, nor the Terms and Conditions page were mentioned in the negotiation. And neither Maag nor anyone else at Avnet manifested assent to those terms or conditions. Indeed, many of the terms, such as the prohibition on making any alterations to the photographs, are at odds with the actual agreement. The Court concludes that the Terms and Conditions page is not part of the agreement between Plaintiff and Avnet. See United Cal. Bank v. Prudential Ins. Co. of Am., 681 P.2d 390, 410, 420 (Ariz. App. 1983) (noting that to incorporate a document by reference, "the incorporating instrument must clearly evidence an intent that the writing be made part of the contract[,] . . . [and] and must be called to the attention of the other party [and] he must consent thereto.") (emphasis added). - 19 Document 277 Filed 08/23/2006 Page 19 of 24

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37.

More generally, even if a model release was not required, Plaintiff presented no evidence that the value of the photographs was diminished as a result of the infringements. Plaintiff admitted that he was attempting to sell the Vallee

photographs through a stock photography website, bigshotstock.com. He presented no evidence that he had any success in so doing. Nor did he present evidence as to whether there is, or has ever been, a market for Vallee photographs. 38. Perhaps Plaintiff could have argued that all of the people who had downloaded the Vallee photographs from the Press Room would have purchased or licensed the photograph from Plaintiff if Avnet had not improperly posted the photograph on its website. But Plaintiff did not present any credible evidence as to how many complete downloads of the Vallee photographs were performed, nor evidence as to how any of those downloads were eventually used. Profits Reaped from the Infringements 39. At trial, the Court ruled that Plaintiff had presented no evidence that Avnet derived any profits as a result of its infringements. Willfulness of the Infringement 40. 41. The state of mind behind Avnet's infringements varied over time. The first infringement was the use in the June 2001 issue of Avnetink Online. Avnet had obtained the Vallee photograph from Upside Magazine. Maag testified that his understanding when he obtained the Vallee photograph from Upside was that Upside owned the rights to the photograph and could therefore transfer the rights. The Court accepts that explanation, and concludes that this infringement was accidental, or, at worst, negligent. 42. The second group of infringements starts with the commencement of the License period and ends with Avnet's receipt of the February 2004 letter from Plaintiff's counsel. The undisputed evidence is that Maag forgot about the terms of the License and permitted the photographs to be used in any manner Avnet saw fit. Plaintiff's counsel did not inquire as to whether Avnet had precautions in place to ensure that - 20 Document 277 Filed 08/23/2006 Page 20 of 24

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Avnet respected the terms of license agreements concerning copyrighted photographs. Nevertheless, it is not an unreasonable assumption that there were no precautions, because if there were, the infringement would either not have occurred, or would not have occurred for so long. Also, if precautions existed, defense counsel likely would have asked about them at trial. The absence of precautions is particularly galling in a large company such as Avnet, which deals regularly with copyrighted materials. The third and final group of infringements are those that occurred after Avnet received the February 2004 letter. With respect to the failure to have the photograph removed from the GCIT website, the Court, as mentioned above, concludes that Avnet simply forgot that it had supplied one of the Vallee photographs to GCIT for use on its website. The Court does not doubt that Avnet employees, such as Carter, made a good faith effort to retrieve all of the Vallee photographs, but Avnet had given out the Vallee photographs so indiscriminately during the preceding years, and had not kept track of the organizations to whom the photographs were given, that it was impossible to recover all of them. Avnet's decision to keep distributing the printed versions of the 2002 and 2003 Annual Reports until October 2005 cannot be justified on the grounds of forgetfulness. Avnet made a calculated decision to continue distribution of these reports, despite knowing that to do so would violate Plaintiff's copyright. During the trial, Plaintiff's counsel failed to inquire as to the motivation behind this decision, and the only reasonable assumption is that Avnet felt it would be too time consuming and costly to reprint the entire 2002 and 2003 Annual Reports just to remove the infringing photographs. This assumption is all the more reasonable because Avnet removed the infringing photographs from the electronic versions of its annual reports. Need to Discourage Wrongful Conduct 46. There is a compelling need to discourage Avnet from replicating its behavior.

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47.

There is no evidence that Maag or his staff had any safeguards to ensure that Avnet complied with the terms of license agreements to which it is a party.

48.

Avnet should have been particularly careful with respect to the Vallee photographs since, even before the License began, Plaintiff had already notified Avnet on one occasion that it was infringing his copyright.

49.

More seriously, with respect to the 2002 and 2003 Annual Reports, Avnet engaged in a balancing process that pitted its desire to save time and money against the need to follow the law, and chose the former.

Other Circumstances 50. Throughout the discovery process, Avnet was less than forthcoming in disclosing to Plaintiff all of the infringing uses. Avnet's stonewalling needlessly prolonged this litigation and made Plaintiff's task of determining his damages all the more difficult. 51. The number of infringements and the duration of the infringing behavior also bears on the issue of statutory damages. Avnet began its infringing behavior in 2001 and it continued until 2005. Avnet used and distributed the copyrighted material freely, resulting in a tremendous number of infringements during the more than four year period. Conclusion: Statutory Damages 52. 53. The Court awards Plaintiff $100,000 in statutory damages. That number, in the Court's view, reflects what is fair and just based on the particular circumstances of this case. 54. On one hand, Avnet did not profit from its infringement, nor did its infringement diminish the market value of the photographs. At most, Avnet saved $15,000 as a result of its infringement. 55. On the other hand, Avnet showed no respect for Plaintiff's copyright for more than four years. Before Avnet received the February 2004 letter, its attitude toward the Vallee photographs is best described as cavalier. Maag negotiated a license with Plaintiff then took no precautions to ensure that it was respected. - 22 Document 277 Filed 08/23/2006 Page 22 of 24

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56.

Avnet's attitude following its receipt of the February 2004 letter demonstrates the sort of arrogance that the imposition of statutory damages is specifically designed to punish. Avnet continued to make illegal use of the very photographs that it was being sued for using illegally, all the while, during discovery, failing to disclose fully the manner in which it was using, and had used, those photographs. And while Maag, the executive responsible for the illegal use, professed contrition for his forgetfulness, he did not own up to the more serious matter of intentionally violating Plaintiff's copyright.

57.

The Court is aware that this award far exceeds the monetary damages suffered by Plaintiff as a result of the infringement. However, "'[e]ven for uninjurious and unprofitable invasions of copyright the court may, if it deems just, impose a liability within [the] statutory limits to sanction and vindicate the statutory policy' of discouraging infringement." Peer Int'l Corp., 909 F.2d at 1337 (quoting Woolworth Co., 344 U.S. at 233). See Los Angeles News Serv. v. Reuters Tel. Int'l, Ltd., 149 F.3d 987, 996 (9th Cir. 1998) (noting that statutory damages can serve "both compensatory and punitive purposes"); Nintendo of Am., Inc. v. Dragon Pac. Int'l, 40 F.3d 1007, 1011 (9th Cir. 1994).

58.

Other cases involving similar conduct have resulted in awards of similar severity. See Peer Int'l Corp., 909 F.2d at 1337 (affirming maximum statutory damage award where the defendant willfully infringed on multiple occasions and was "engaged in the business of selling copyrighted works"); Warner Bros., 346 F. Supp. 2d at 1074 (awarding maximum statutory damages where the defendant, a screener for the Academy Awards, willfully breached written agreement not to distribute copies of nominated films by giving films to multiple third parties and posting films on the internet for free download); Harris, 734 F.2d at 1335 (awarding maximum statutory damages for willful infringement of license agreement).

Breach of Contract 59. There is no dispute that Avnet breached the terms of its contract with Plaintiff. - 23 Document 277 Filed 08/23/2006 Page 23 of 24

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60.

Plaintiff argues that he is entitled to recover both for the breach of contract and for the violation of his copyright.

61.

Plaintiff is incorrect. A plaintiff cannot recover for both breach of contract and copyright infringement where, as here, both claims arise out of the same set of operative facts. Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 886 F.2d 1545, 1556 (9th Cir. 1989); Junker v. Eddings, 396 F.3d 1359, 1368 (Fed. Cir. 2005); Bowers v. Baystate Techs., Inc., 320 F.3d 1317, 1327-28 (Fed. Cir. 2003) (affirming denial of copyright infringement damages that arose from same lost sales as breach of contract damages); Celeritas Techs., Ltd. v. Rockwell Int'l Corp., 150 F.3d 1354, 1362 (Fed. Cir. 1998) (discussing need to avoid duplicative damages where patent infringement, breach of contract, and misappropriation causes of action arose from same set of operative facts); MCA Tel., Ltd. v. Pub. Interest Corp., 171 F.3d 1265, 1271 (11th Cir. 1999). IT IS ORDERED entering judgment in Plaintiff's favor in the amount of $100,000.

DATED this 22nd day of August, 2006.

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