Free Proposed Findings of Fact - District Court of Arizona - Arizona

1 MESCHKOW & GRESHAM, P.L.C. 2 Lowell W. Gresham (AZ Bar No. 009702) 3 Suite 409 4 5 6
5727 North Seventh Street Phoenix, Arizona 85014-5818 (602) 274-6996 (602) 274-6970 (facsimile) Attorneys for Plaintiff Jordan M. Meschkow (AZ Bar No. 007454)

GILES LEGAL, P.L.C. 7 Nancy R. Giles (AZ Bar No. 020163) 8 Phoenix, Arizona 85007 9 (602) 252-1788 Attorney for Plaintiff 10 11 12 UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Case No.: CV-04-0621 PHX SRB
733 West Willetta Street

DAN COOGAN, doing business as 13 COOGAN PHOTOGRAPHIC, 14 15 16 17 18 19 20 FINDINGS OF FACT 21 22 23 The Parties 1. 2. AVNET, INC., et al., Defendants. v. Plaintiff,

PLAINTIFF'S PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW

Plaintiff is1 a professional photographer. Avnet, Inc. ("Avnet") is a for-profit publicly traded company with varied

24 business operations worldwide, headquartered in, managed, and operated from Phoenix, 25 Arizona. 26 27 28 Unless otherwise noted, the use of the present tense refers to all relevant times for purposes of this litigation. Case 2:04-cv-00621-SRB Document 242 Filed 06/22/2006 Page 1 of 35 8050-0131-Z06640 1
1

3.

Defendant Roy Vallee ("Vallee") is Avnet's Chief Executive Officer.

1

4.

Vallee was appointed to the Arizona Governor's Council on Innovation and

2 Technology ("GCIT") in February 2003, and has been the co-chair of the GCIT since 3 October 2005. 4 5. Avnet provided the use of one of Plaintiff's Photographs for the GCIT

5 website. 6 6. Using one of Plaintiff's photographs to identify Mr. Vallee in a file name

7 rv.jpg (Vallee leaning on his right arm looking at the camera with several windows behind 8 him, referred to in this case as "Photo 2"), Avnet promoted Vallee's original appointment 9 to the GCIT throughout Avnet and to others in the February 9-13, 2003 This Week at Avnet 10 mass email publication to 8,000 Avnet employees, including the Board of Directors, as an 11 employee relations document, as well as to outside contractors, thus making over 8,000 12 copies of the image in rv.jpg. 13 7. Defendant Allen Maag ("Maag") is Avnet's Chief Communications Officer,

14 and an Avnet corporate officer who makes decisions on behalf of Avnet, including 15 decisions with respect to Avnet's business development and promotion. 16 8. Maag "is responsible for brand management, which includes global public investor relations marketing, community relations and corporate

17 relations,

18 communications" (emphasis added). 19 9. Maag owns 2,200 shares of Avnet stock and, since 2001, has received many

20 hundreds of thousands of dollars in compensation and bonuses based on the Company's 21 performance in the marketplace and public relations goals. 22 10. From Maag's deposition there is sufficient evidence of a direct financial

23 interest in the infringement to impose individual liability. Maag's compensation packages 24 with significant bonuses all depend on the performance of Avnet and its profits and values. 25 The evidence shows how much he is paid greatly depends on his effectiveness in 26 promoting Avnet through public relations. Since Maag directed Avnet to use Plaintiff's 27 photographs for public relations, and Maag's compensation package depended on such, he 28 has a direct financial interest sufficient for individual liability and the infringement in this
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

2

Filed 06/22/2006

Page 2 of 35

1 case had a significant impact on Maag's compensation with Avnet. Thus, Maag had a 2 direct financial interest in the infringement and, as such should be held jointly and 3 severally liable for Defendants' willful infringement. 4 11. Avnet is managed by the Avnet Executive Board members and Avnet's

5 Board of Directors, who make decisions on behalf of the company. Vallee and Maag are 6 members of the Avnet Executive Board. 7 12. Avnet, with its with varied business operations worldwide, has one Corporate Department, which is in Phoenix, Arizona. This Corporate 8 Communications

9 Communications Department is headed by Maag as Chief Communications Officer, who 10 supervises Jan Jurcy, Vice President, Public Relations ("Jurcy"); Michele Spiegel, Director 11 of Employee Communications ("Spiegel"); Clay Stubblefield, Vice President, Corporate 12 Broadcast Center; Bob Hackett, Director of Multimedia; and others. 13 13. Jurcy interfaces directly with an Avnet-retained public relations firm, 14 Brodeur Worldwide. 14. Maag and Spiegel co-manage Javed Badar, Director of Creative Services, and 15 16 Michelle Taylor, Manager Communications. 15. Avnet's Corporate Communications Department exists only to promote and 17 18 publicize Avnet, to increase profitability through public relations. Maag is the head of the 19 Corporate Communications Department and is, accordingly, paid based on Avnet's profits. 20 21 22 23 24 25 26 27 28 Background 16. Pursuant to an assignment photography hire at low editorial rates, Upside

Magazine ("Upside") hired Plaintiff to shoot photographs of Vallee (collectively, the "Vallee Photographs"), knowing one was to be chosen to be used once in an upcoming Upside article. 17. Following the April 2001 photo shoot, Plaintiff registered the Vallee

Photographs (and other photographs) for an unpublished copyright registration entitled CooganPhoto.com - April 2001, and alternatively entitled 1. Roy Vallee, Avnet 01-0412 ag, 2. Jeff Hatch-Miller, AZ House Legislator 01-0416 a-f, 3. Wells Fargo 01-0420 a-d.
Case 2:04-cv-00621-SRB Document 242

8050-0131-Z06640

3

Filed 06/22/2006

Page 3 of 35

1

18.

Upside published one of Plaintiff's photographs (Vallee looking at the

2 camera resting on his left arm with a window behind his head, referred to in this case as 3 "Photo 1") on Page 1 of a four-page article about Vallee in its July 2001 issue, starting at 4 page 48. The photograph as it appeared in that issue, was sized 2/3 of a page. 5 19. Avnet scanned (copied) Photo 1 directly from page 48 of Upside and into a
2 6 file name roy4ink.jpg (thus making Copy 1 of Photo 1). Avnet also scanned (copied) the

7 entire four-page article (pages 48-52) directly from the July 2001 Upside magazine and 8 saved it separately (thus making Copy 2 of Photo 1). Avnet then used the copied file 9 roy4ink.jpg in the June 27, 2001 issue of "AvnetInk Online," an e-mail newsletter 10 distributed to approximately 8,000 employees, 100 stock analysts, Avnet's public relations 11 firm, and certain journalists who follow the industry, to announce and promote the Upside 12 article, with a link to a PDF file for downloading the scan of pages 48-52 of the July 2001 13 Upside magazine. 14 20. Avnet also allowed free, unlimited, uncountable, undiscoverable downloads

15 and forwards of the email and the PDF file link to the article, a fact that it concealed 16 throughout discovery in this case. 17 21. On or about August 8, 2001, Javed Badar of Avnet scanned, cropped, and

18 saved another photograph of Roy Vallee provided by Upside, into a file named "roy-2.tif" 19 (Copy 3 of Photo 1). This image was copied into and used in the July/August 2001 and 20 September 2001 editions of Avnet Global Perspective Magazine ("AGP") to identify 21 Vallee to the 16,000 recipients of each edition (Copies 4 and 5 of Photo 1, respectively, 22 each having at least 16,000 distributed copies). 23 22. When Plaintiff visited Sean Fanning ("Fanning") of Avnet in October 2001 24 on an unrelated matter, he first saw one of his Vallee Photos in an AGP issue lying on a 25 table at Avnet. Plaintiff immediately told Fanning of the unauthorized use of the Vallee 26 Photo(s) in AGP and specifically put Fanning and, therefore, Avnet, on notice it had 27 committed copyright infringement. Plaintiff also informed Fanning/Avnet that he had not 28
2

8050-0131-Z06640

Case 2:04-cv-00621-SRB

The file shows lines bleeding Document 242 unrelated article on page 47 4 of 35 through from an Filed 06/22/2006 Page of Upside. 4

1 been paid by Upside for the Vallee photo shoot. Fanning told Plaintiff his image had been 2 used in another AGP issue, as well and warned Plaintiff, "You don't want to sue us, we've 3 got a lot of lawyers." 4 23. Fanning never contacted Plaintiff again. Thus, Plaintiff contacted Maag and,

5 following a brief telephone conversation, they exchanged e-mails over roughly a four6 month period. 7 24. In a January 10, 2002 e-mail to Maag, Plaintiff stated that Upside had gone

8 out of business without paying his $1,192.75 fee for the photo shoot, and that Plaintiff had 9 "registered all the images before publication with the copyright office to protect my 10 interests." Plaintiff therein stated that the licensing fee for the two uses in AGP would 11 have been $850 if negotiated in advance ($425 per use), but, because Avnet had used them 12 without authorization, there was a "3x fee for unauthorized use" and "the new total is
3 13 currently $2,250" , based on unauthorized use. Attempting to encourage Maag and Avnet

14 to do business with him in the future, Plaintiff sent Maag 7 jpeg images to view, each jpeg 15 being a scan of each of the 7 rolls of film, containing all the images from the Upside 16 Magazine assignment (i.e., all of the Vallee Photographs), now in Plaintiff's stock 17 photographs. 18 25. During the ensuing emails, Maag asked "How much do u want for all

19 images?" When Plaintiff replied, he thanked Maag for getting back to him, and told Maag 20 "I don't know if I can count that high :-) I hadn't expected that question, but do you think 21 you would need all of them? I try and give clients what they want, and normally it's more 22 cost effective to license images for a set period of time, but I can give you a price for usage 23 of all the images, but it will be expensive." Plaintiff then asked Maag if he wanted "a total 24 copyright transfer of all the images (approx. 100 images) or licensing the use of all the 25 images for a period of 1-5 years?" Maag then volunteered "I would probably use a few for 26 a year before we do new ones. For PR reasons and internal newsletters." 27 28
3

8050-0131-Z06640

Case 2:04-cv-00621-SRB

This was a typographical error, because 3 x 850 Filed 06/22/2006 is $2,550.00. Document 242 5

Page 5 of 35

1

26.

Plaintiff offered Maag a "3x use fee" or an "Alternative scenario: Avnet

2 chooses additional images that would be licensed for a set period of time, the additional 3 fees would be combined with the current amount due. In effect -- the 3x fee for 4 unauthorized use now becomes a license for 1 year (instead of 2x use) if other images are 5 licensed (sort of a package deal or a discount) -- giving Avnet more use than they would 6 have gotten for the same money. Avnet pays more than the current amount due, but they 7 also receive more usage. This way Avnet benefits with more images for less money than 8 they would otherwise pay." Maag responded, "ok set up a meeting with my assistant 9 Lisa..so I can see them and we can finalize something." 10 27. Plaintiff and Maag met on March 6, 2002 and ostensibly reached a tentative,

11 non-binding agreement concerning the past and future use of Plaintiff's photographs. 12 Immediately thereafter, Plaintiff emailed Maag "the deal was 850 x 3 = $2,550 for the 2 13 unauthorized uses. Some how you were able to convince me I should license the images to 14 Avnet for 2 years use for $2,500 with no promise of additional work. I can not agree to 15 that, and was better off before I went to the meeting." He then counter-offered Maag with 16 "2 year use of the images for Avnet, excluding magazines (like Forbes, Fortune, Business 17 Week -- if they call wanting a photo provided by Avnet, and you want to use one of these, 18 refer them to me for the stock sale) for $5,000." 19 28. On March 13, 2002 Maag responded with the belittling comment, "I really

20 feel I owe you nothing regarding the usage of Roy's photo in the newsletter." Then Maag 21 counter-offered "$2,500 and we use them as we see fit for one year (to bend a little I 22 reduced by one year). If used by a publication outside our industry we serve I will pay you 23 a $500 fee". To provide the allure of future or continuing work with Avnet, Maag further 24 stated that "A relationship with me is built on many things...in my opinion this is how we 25 start one." 26 29. Almost a month later, on April 10, 2002, Plaintiff capitulated and sent Maag

27 his standard invoice/contract offering a deal covering the past issues of AGP, and the non28 exclusive use for one year, of "[a]n additional 3-5 images from the same photo shoot in
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

6

Filed 06/22/2006

Page 6 of 35

1 Avnet publications (excluding the annual report). ... No other rights are granted. These 2 rights may not be transferred by the client to a third party. Copyright for all images are 3 retained by the photographer and all rights are reserved." (Emphasis added). 4 30. Avnet clearly agreed to these terms: First Avnet paid Plaintiff the $2,500.

5 Second, Avnet has confessed that "Maag forwarded the Invoice to Avnet's accounting 6 department, which paid it in full." Third, in response to a request for admission,

7 Defendants admitted that the check was issued to Plaintiff for payment of the Invoice, and 8 "constitutes a writing accepting the terms set forth in the [I]nvoice." 9 31. Shortly thereafter, however, Avnet began using Plaintiff's photographs again

10 without authorization. Plaintiff never heard from Maag again despite 1) his promise of 11 additional $500 payments or 2) building a relationship. 12 The Infringement and Breach of Contract 13 32. Upon receiving the Vallee Photos from Plaintiff for viewing, Avnet stored

14 Plaintiff's Photographs in various files all modified from Plaintiff's original jpeg files, and 15 allowed third parties to make other files from Plaintiff's image files because some 16 downloaded are different file types. Avnet's actions were expressly prohibited by the 17 contract in Terms and Conditions "K. Alterations: Client will not make or permit any 18 alterations, additions, or subtractions in respect of the photographs, including without 19 limitation any digitalization or synthesizing of the photographs, alone or with any other 20 material, by use of computer or other electronic means or any other method or means now 21 or hereafter known." With Photo 1, Avnet made the following files modifying Plaintiff's 22 Vallee Photos: 23 24 33. a. roy4ink.jpg b. rv.jpg

With Photo 2, Avnet made the following files modifying Plaintiff's Vallee a. b. c. d. e. f. tif_300dpi_roy_vallee_board.tif vallee_small.tif vallee.jpg rv.jpg jpg-72dpi_roy_vallee_board.jpg vallee_r.jpg
Document 242

25 Photos: 26 27 28
8050-0131-Z06640

Case 2:04-cv-00621-SRB

7

Filed 06/22/2006

Page 7 of 35

1 2 3 4 5 34.

g. h. i. j. k. l. m.

thumbnails_roy_vallee_board.jpg vallee_r_small.jpg vallee_small_blur.tif roy_vallee_board_big.jpg roy_vallee_board.tif vallee_r_1.eps vallee_office_table.jpg

With Photo 2, Avnet allowed Third Parties to make the following files

6 modifying Plaintiff's Vallee Photos: a. 1081D_vallee.gif 7 b. roy_vallee_board3.jpg 8 35. With Photo 3, Avnet made the following files modifying Plaintiff's Vallee a. vallee-r.tif b. globalperspective-b.eps c. vallee_r_2.eps 36. At first, Avnet used one of Plaintiff's photographs (Photo 2, Copy 1) "in 9 Photos: 10 11 12

13 Avnet publications", i.e., the AGP July/August 2002 edition. Avnet printed and distributed 14 approximately 16,000 copies of the July/August 2002 AGP. In this issue, Copy 1 of 15 Plaintiff's Photo 2 appeared on page three, centered, accompanying the Message from the 16 CEO column. 17 37. Avnet then released approximately 11,000 copies the AGP

18 September/October 2002 edition using Copy 1 of Photo 3. In this issue, Copy 1 of Photo 3 19 was used on page two, centered, accompanying Message from the CEO column, and 20 identifying Vallee. 21 38. Avnet then planned to, and did, use Copy 2 of Photo 3 in its 2002 Annual

22 Report, which was a new copy of the same rendition of Plaintiff's Photograph as in the 23 AGP September/October 2002 edition. This Annual Report cost Avnet $20,580.34 to 24 produce, and $55,670.13 to print and ship, for a total cost of $76,250.47. On October 8, 25 2002, Avnet released 55,000 printed copies (with only 5,650 shareholders), and over 26 63,000 electronic copies of its 2002 Annual Report, all with Plaintiff's photograph 27 identifying CEO Vallee for Avnet, in a slick, glossy, Annual Report that falls open to the 28 CEO page when held by its binder. The printed copies were distributed for nineteen months
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

8

Filed 06/22/2006

Page 8 of 35

1 after suit was filed into October 2005, while the electronic copies were distributed with the 2 infringing Vallee Photograph until February 2004. In June 2005, Avnet falsely 3 represented to this Court that "When Avnet learned that it had infringed on plaintiffs 4 copyright in the photographs, it immediately discontinued its use and distribution of 5 the photographs." It did not. 6 39. In releasing its 2002 Avnet Annual Report, Avnet breached its contract with

7 Plaintiff, thus losing all rights under the contract and, among other things, nullifying 8 Avnet's rights under the contract, thus making Avnet liable again for its two 2001 known 9 unauthorized uses of the Vallee Photographs in its AGP issues. At that time, however, 10 Plaintiff remained unaware of this breach and had no knowledge of the Avnetink Online 11 newsletter or the scan of the Upside Magazine. 12 40. Between August and December 2002, Avnet supplied an unknown file of

13 Photo 2 to the Supply-Chain Council, Inc. (and its management company Aspect Asset 14 Management Corporation), and it used the file named roy_vallee_board3.jpg on its website 15 to invite all its members and others to its annual conference. 16 41. The Vallee Photographs were well circulated throughout Avnet's market via

17 print brochure, a downloadable brochure, via Avnet's web site, via the Avnetink Online 18 newsletter, via AGP, via Avnet's Annual Reports, and via the web from the Supply-Chain 19 Council's website, before and until the Supply-Chain Council February 25, 2003 20 conference date. 21 42. In the Amended Complaint Exhibits regarding the Supply-Chain Council

22 (Exhibits 43 and 45) containing a cropped version of Photo 2, Vallee and Avnet are 23 promoted repeatedly: "Roy Vallee Chairman of the Board and Chief Executive Officer, 24 Avnet, Inc."; "Avnet is on track currently with strategic acquisitions, globalization, 25 investments in information technology, and collaboration with suppliers, customers, and 26 even competitors, to expand the space that Avnet occupies in the technology marketplace"; 27 and "Since becoming CEO, he has overseen 15 acquisitions with top line revenues totaling 28 more than $6.5B. Mr. Vallee was also honored as Executive of the Year (2000) by Arizona
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

9

Filed 06/22/2006

Page 9 of 35

1 State University's College of Business -- Dean's Council of 100, which selects a business 2 leader each year `whose contribution is deemed significant to the nation, whose inspired 3 management has created and sustained superior organizational performance and who 4 exhibits the qualities of a role model for future business leaders.'" 5 43. Apparently with no regard for Plaintiff's copyright, Avnet then printed and

6 distributed approximately 11,000 copies of the AGP January/February 2003 edition 7 containing a more cropped version of Photo 3 than in the AGP September/October 2002 8 edition, thus a new derivative work (i.e., Copy 3 of Photo 3). In this issue, Plaintiff's Photo 9 3, Copy 3 appeared on page two in the left-margin, accompanying the Message from the 10 CEO column. 11 44. Shortly thereafter, Avnet promoted Vallee's appointment to the GCIT in

12 February 2003 in its This Week at Avnet publication identified in Paragraph 5, above. For 13 ease of reference, the photograph used for this purpose is referred to herein as Photo 2, 14 Copy 2; however, Avnet made and distributed over 8,000 copies of the photograph. 15 45. On April 7, 2003, Avnet sent a link to Vallee's Avnet biography and an

16 unauthorized copy of Plaintiff's Vallee Photograph Photo 2 to the GCIT. The GCIT used 17 Vallee's bio with a varied shade-bordered version of Plaintiff's photograph, thus creating 18 Photo 2, Copy 3. 19 46. This litigation was filed and served in March 2004, with a waiver of service

20 entered for Vallee in May 2004; thus, Vallee had notice of this GCIT infringement with his 21 biography, and as a concurrent Avnet CEO and GCIT Board Member he became the 22 individual responsible for keeping track of use of Plaintiff's photographs for Vallee's bio 23 by the GCIT. With Vallee attending the September 15, 2004, October 25, 2004, January 24 26, 2005, and May 18, 2005 GCIT meetings as a GCIT Board Member, "he had the 25 authority to stop the infringing activity." Playboy Enters. v. Starware Publ'g Corp., 900 F. 26 Supp. 438, 440-41 (S.D. Fla. 1995). Vallee, however, took no action to remove 27 Plaintiff's photograph from that website until December 2005, all the time Plaintiff's 28
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

10

Filed 06/22/2006

Page 10 of 35

1 photograph still identifying Vallee, and promoting Avnet via Vallee's announced public 2 service. 3 47. As with all of Defendants' unauthorized uses of the Vallee Photographs,

4 Avnet gained more publicity for its community services through its GCIT recognition, and 5 such publicity leads to profits. 6 48. Vallee is and was a GCIT Board Member with the power to control this third

7 party use; moreover, not only is his salary tied to Avnet, Inc.'s income, Avnet itself 8 prospered and garnered goodwill and, hence, profits due to Vallee's appointment to the 9 GCIT and the subsequent publicity associated with that appointment. 10 49. Numerous articles and descriptions of Mr. Vallee through the years included

11 his appointment to the GCIT, sending persons to the GCIT website to find him in 12 Plaintiff's photograph: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a. The news of Mr. Vallee's appointment to the GCIT, transmitted by

Avnet and others far and wide, ultimately reached the news archives for Southbridge, Massachusetts US-NEWS-WATCH.COM site, Copyright us-newswatch.com 2003, with a live link to the website with Plaintiff's photograph at http://www.gcit.az.gov/members/Roy_Vallee.html. See CGN 01230-01232. It is still listed there now at http://us-news-watch.com/Massachusetts/Southbridge.html. b. When The Business Journal, Phoenix released its August 27, 2004 print

edition, Tech Industry Gets a Jump on `05 Legislative Session and discussed the GCIT and how "Roy Vallee, chairman and CEO of Avnet Inc. will lead the Brand/Image Development and Awareness group", the instant lawsuit was five months in progress, and Plaintiff's photograph remained with Mr. Vallee's biography on http://www.gcit.az.gov/members/Roy_Vallee.html. c. When The Business Journal, Phoenix, posted the August 27, 2004 print

edition article Tech Industry Gets a Jump on `05 Legislative Session on its website, and discussed the GCIT and how "Roy Vallee, chairman and CEO of Avnet Inc. will lead the Brand/Image Development and Awareness group", Plaintiff's
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

11

Filed 06/22/2006

Page 11 of 35

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

photograph

remained

with

Mr.

Vallee's

biography

on

http://www.gcit.az.gov/members/Roy_Vallee.html. d. When the Arizona Technology Council posted The Business Journal,

Phoenix article, dated September 3, 2004, Tech Industry Gets a Jump on `05 Legislative Session, on its website at www.aztechcouncil.org, and discussed the GCIT and how "Roy Vallee, Chairman and CEO of Avnet Inc. will lead the Brand/Image Development and Awareness group", Plaintiff's photograph remained with Mr. Vallee's biography on http://www.gcit.az.gov/members/Roy_Vallee.html. e. When the Arizona Department of Commerce released a February 25,

2005 press release announcing "CEO's Vote Arizona Top Five for Business", and discussed how "the Governor's Council on Innovation and Technology (GCIT) established a marketing committee that has been working since last July to target CEO's nationwide . . .. Avnet Chair and CEO Roy Vallee chairs the Committee and says the magazine survey validates the approach his group is taking", this lawsuit was less than one year old, and Plaintiff's photograph remained with Mr. Vallee's biography on http://www.gcit.az.gov/members/Roy_Vallee.html. f. When the State of Arizona Executive Office News Release was

released on October 25, 2005 announcing "Governor Names New Co-Chairs for Tech Council", and one of the co-chairs named was Defendant Roy Vallee, Plaintiff's photograph remained with his biography on

http://www.gcit.az.gov/members/Roy_Vallee.html. g. When the article Arizona Governor Names New Co-Chairs For Tech

Council was published by Government Technology at http://www.govtech.net on November 8, 2005, and one those co-chairs named was Defendant Roy Vallee, Plaintiff's photograph remained with his biography on

http://www.gcit.az.gov/members/Roy_Vallee.html. h. When the article on the Avnet/Calence merger was reported by the

Arizona Republic November 30, 2005 article, page D2 closing paragraph reading,
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

12

Filed 06/22/2006

Page 12 of 35

1 2 3 4

"Vallee and Fong are members of the...[GCIT] and have been named co-chairs for the coming year", Plaintiff's photograph remained with his biography on http://www.gcit.az.gov/members/Roy_Vallee.html. 50. On April 9, 2003 all of Avnet's rights under the contract with Plaintiff,

5 expired. 6 51. Although Avnet had breached the contract months earlier, Plaintiff was

7 unaware of any of Avnet's uses of his photographs as of April 9, 2003. 8 52. Avnet printed and distributed approximately 11,000 copies of the AGP

9 July/August 2003 edition using the same rendition of Plaintiff's Photograph as in the AGP 10 January/February 2003 edition (i.e., Photo 2, Copy 4). In this issue, Plaintiff's Photo 2, 11 Copy 3, appeared on page three, centered, accompanying the Message from the CEO 12 column. 13 53. Avnet printed and distributed approximately 11,000 copies of the AGP

14 September/October 2003 edition using a more cropped version of Photo 2, and therefore, a 15 derivative thereof, of the image in the AGP July/August 2002 edition. In this issue, 16 Plaintiff's Photo 2, Copy 5, appeared on page three, right-margin, accompanying the 17 Message from the CEO column. 18 54. Avnet then planned to, and did, use Photo 2, Copy 6 in its 2003 Annual

19 Report, which was a less cropped image than those found in the AGP July/August 2002 20 edition, the AGP September/October 2003 edition, or the page three, AGP 21 November/December 2003 edition, and a merge of a clear image and a blurred image, and 22 therefore, another derivative. This 2003 Annual Report cost Avnet $9,918.17 to produce, 23 and $57,357.95 to print and ship, for a total cost of $67,276.12. On October 8, 2003, Avnet 24 released 60,000 printed copies (with only 6,067 shareholders), and over 14,000 electronic 25 copies of its 2003 Annual Report, all with Plaintiff's photograph identifying CEO Vallee 26 for Avnet, in a slick, glossy, Annual Report that falls open to the CEO page when held by 27 its binder. The printed copies were distributed for nineteen months after suit was filed into 28 October 2005, while the electronic copies were distributed with the infringing Vallee
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

13

Filed 06/22/2006

Page 13 of 35

1 Photograph until February 2004. In June 2005, Avnet falsely represented to this Court 2 that "When Avnet learned that it had infringed on plaintiffs copyright in the 3 photographs, it immediately discontinued its use and distribution of the 4 photographs." It did not. 5 55. By distributing infringing 2002 and 2003 Annual Reports for 19 months after

6 being sued for such, Avnet saved as much as the $55,670.13 and the $57,357.95 original 7 prints and ship costs, in not reprinting either the 2002 or 2003 Annual Report. Considering 8 that the 2003 Annual Report, released October 2003, was five months old when suit was 9 filed March 2004, this savings was substantial. 10 56. Avnet printed and distributed approximately 11,000 copies of the AGP

11 November/December 2003 edition using a third rendition of Plaintiff's Photograph (more 12 cropped than the July/August 2002 edition or the September/October 2003 edition and 13 therefore, a derivative thereof). In this issue, Plaintiff's Photo 2, Copy 7, appeared on page 14 three, centered, accompanying the Message from the CEO column. 15 57. In the approximately 11,000 distributed copies of the AGP

16 November/December 2003 edition, Avnet used a second of Plaintiff's images on page ten, 17 large-sized accompanying article Distribution Still Vital After All These Years. This 18 image of Plaintiff's Photo 3 was more cropped than either of its appearances in the AGP 19 September/October 2002, or the January/February 2003 edition, thus, another derivative 20 thereof, and constituted Photo 3, Copy 4. 21 58. Avnet then sent Plaintiff's Vallee Photograph file roy_vallee_board.tif, Photo

22 2, Copy 7 to Todd Wertheimer, a Morgan Stanley representative, who used it in a print 23 program made available to the attendees of the "Annual Semi-Conductor and Systems 24 Conference" in Dana Point, California on March 2, 2004. This infringement was not 25 disclosed to Plaintiff until March 14, 2006, and after a meet-and-confer, Plaintiff's 26 subpoena is now outstanding. Disclosing this information so far past the discovery cut-off, 27 and, indeed, only four months prior to trial was wrongdoing under Rule 26, FED. R. CIV. P. 28
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

14

Filed 06/22/2006

Page 14 of 35

1

59.

So enamored with Plaintiff's photographs, Avnet's Javed Badar made

th 2 another copy, Photo 2, Copy 8 presented to Vallee in a 50 anniversary card from Avnet.

3

60.

In 2004, Mr. Vallee was appointed to the Global Technology Development

4 Council. Avnet prominently used Plaintiff's photograph (Photo 2, Copy 9) again in a 5 January 25-31, 2004 This Week at Avnet and in the same issue, used it again to highlight a 6 Town Hall Broadcast. The news of Mr. Vallee's appointment to the Global Technology 7 Development Council through this issue of This Week at Avnet was circulated widely by 8 Avnet, and Avnet's Director of Marketing Communications, Michele Gorel ("Gorel"), 9 received word that CRN (a CMP Media LLC company) was running an interview with 10 Vallee about the appointment and wanted a photo of him "something beyond his standard 11 head-and-shoulder shot". 12 61. Gorel relayed CRN's request in a January 21, 2004, 11:31 a.m. email to

13 Jurcy, Spiegel, and Michelle Taylor. By 11:40 a.m., Jurcy replied to Gorel, "I have one. 14 I'll forward to you and you can send to CRN and also keeping your falls for the future." 15 Three minutes later, at 11:43 a.m. Jurcy sent Gorel the file vallee_office_table.jpg, and at 16 11:44 a.m., Gorel sent this file to Scott Campbell, Distribution Editor for CRN, whose 17 duties are "to cover the distributors and IT two-tier distribution channel for our magazine 18 for resellers, that is I write and report on different stories focusing on distributors." 19 62. The image on CRN.com was in an article at

20 http://www.crn.com/Sections/Interview/interview.asp?ArticleID=47494 and was Photo 2, 21 Copy 10. Yet, on its website CRN used a small-sized 165 x 172 @ 72 dpi gif image in the 22 article named 1081D_vallee.gif, presumably converted from the file vallee_office_table.jpg 23 sent by Avnet. Moreover, though Avnet knew in February 25, 2004 that CMP Media 24 sister-publication ChannelWeb.com also used Plaintiff's photograph, in another article 25 reporting on the first one at

26 http://www.channelweb.com/sections/Newscenters/interview.asp?newscenterID=58&Artic 27 leID=47494 (Photo 2, Copy 11), Avnet waited until December 28, 2005 to disclose this 28
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

15

Filed 06/22/2006

Page 15 of 35

1 use, as well an AZCentral.com use (and which photo is unknown), and that it well knew 2 about the Supply-Chain Council use. This is wrongdoing under Rule 26, FED. R. CIV. P. 3 63. CRN then set up a completely differently formatted print version of the

4 article, running it as the Distribution feature, in the February 2, 2004 large format CRN 5 Magazine with Plaintiff's photograph identifying Vallee for Avnet, with a circulation/print 6 run of 110,000 copies "to IT executives, resellers, distributors", Avnet's target customers. 7 The print magazine used a far larger version of Plaintiff's photograph in the magazine, thus 8 being Photo 2, Copy 12. 9 64. Within days of the CRN uses, one of Plaintiff's images in a file named

10 vallee_r_small.jpg appeared front-and-center at www.avnet.com, with a "click-through" to 11 a video interview with Vallee. This image remained there until Avnet was notified it was 12 infringing by a February 24, 2004 letter, presumably on February 25, 2004 (because it was 13 already removing the Vallee photographs from its website February 27, 2004). In its time 14 there it was displayed to over one million visitors to www.avnet.com. 15 65. On February 27, 2004, Avnet personnel Rachel SantaCruz was advising other

16 Avnet personnel Vicki Calabro, Michele Spiegel, Michelle Taylor, Jan Jurcy; Javed Badar, 17 Tara Nichols; and Bob Hackett, "I don't know if anyone has had a conversation with you 18 about this but earlier this week we were found to be violating a copyright on some of the 19 Roy photos we were using on the website, in annual reports, newsletters, etc. We have been 20 working hard to get rid of all occurances of these photos but we cannot control what people 21 have on their harddrives, etc." 22 66. In December 2005, months after Avnet provided logs interpreted by Avnet as

23 showing vallee_r_small.jpg appeared on www.avnet.com from February 5, 2005 to 24 February 25, 2005, Avnet admitted and verified that "that in 2002 Avnet.com 25 (http://www.avnet.com) bore at least one of PLAINTIFF'S PHOTOGRAPHS directly on 26 the home page for this website." At the same time Avnet admitted that "at the time that 27 [Avnet] won at least one Stevie Award concerning [its] website, the home page of 28
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

16

Filed 06/22/2006

Page 16 of 35

1 www.avnet.com carried at least one of PLAINTIFF'S PHOTOGRAPHS." Since Avnet 2 won the award in March 2004, the award covered its website from 2003. 3 67. Avnet has not and cannot disprove its admission that the file

4 vallee_r_small.jpg or one of the many other files appeared on the home page of 5 www.avnet.com in 2002 and 2003. 6 68. Avnet made various files of Plaintiff's photographs in differing file types, file

7 sizes, and aspect proportions (all derivative works), storing each on one or more server 8 computers, and making each available for display at avnet.com, avnet.de, and ir.avnet.com 9 websites and each at separate sub-links therein. Each link where Avnet made a file of 10 Plaintiff's photographs available for display is a separate violation of the display right. 11 Each of avnet.com, avnet.de, and ir.avnet.com Board of Directors pages had four distinct 12 links to display a webpage with one of Plaintiff's photographs, and to display one of 13 Plaintiff's photographs. 14 69. Each storing of Plaintiff's photographs on a server computer to use in any

15 way, was an unauthorized reproduction as of October 8, 2002 (when the contract was 16 breached), or, in the alternative, April 9, 2003 (when the contract expired). 17 70. Avnet made its websites so a visitor to www.avnet.com could download at

18 no charge any of Plaintiff's photographs from an Avnet webpage, or download any of 19 Plaintiff's photographs from several links Avnet established on its website, including a 20 Press Room that invited downloads. This download capability constituted multiple 21 prohibited third-party uses of Plaintiff's photographs and was specifically proscribed by the 22 contract. It also constitutes multiple de facto infringements. 23 71. Each display of a website page causes the website to be copied to Random

24 Access Memory, video memory, and/or permanent, fixed disk memory on a visitor's 25 personal computer for short-term copying or long-term copying. Avnet made Plaintiff's 26 photographs available for display so they could be so copied. 27 72. On September 27, 2004, Plaintiff sought all uses Avnet made of Plaintiff's

28 photographs in an interrogatory reading "State the date (month, day, and year) and
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

17

Filed 06/22/2006

Page 17 of 35

1 circumstances concerning Defendants' first use and all subsequent uses of Plaintiff's 2 Photographs of Roy Vallee and the manner and extent of such first and all subsequent uses, 3 whether on an Avnet website, a third-party website, or in any report or publication." A 4 concurrently served document request sought "All documents that Defendant was required 5 to identify or did identify in its response to Plaintiff's First Set of Interrogatories to Avnet." 6 73. On March 14, 2006, Avnet provided an answer so detailed it shows that its
4 7 answers on November 1, 2004, and March 30, 2005 evaded disclosing such actual uses

8 until discovery was closed. This is wrongdoing under Rule 26, FED. R. CIV. P. 9 74. Avnet disclosed February 2004 Avnet documents related to Avnet personnel

10 not scheduled for deposition that should have been provided on November 1, 2004, or 11 March 30, 2005, late in December 2005. This is wrongdoing under Rule 26, FED. R. CIV. 12 P. 13 75. Avnet prevented Plaintiff from taking two scheduled depositions in January

14 2006. This is wrongdoing under Rule 26, FED. R. CIV. P. 15 76. In June 2005, without knowing all of Avnet's uses of Plaintiff's photographs,

16 Plaintiff's expert witness, Richard Weisgrau ("Weisgrau"), former 15-year Executive 17 Director of the American Society of Media Photographers, the nation's premier 18 organization of photographers who produce photography for all types of media use, 19 estimated on the basis of 24 months of unauthorized use from April 2002 through March 20 2004, and using a scientific analysis Plaintiff's damages amount at $418,320 under 21 prevailing individual stock photography rates. In doing so, Weisgrau concluded infringer 22 Avnet was entitled to no long-term or bundled-rate discounts, used the 3X provision which 23 is a prevailing industry infringing multiplier and was noted in Plaintiff's contract in several 24 places: 25 26 Client agrees that reasonable and stipulated amount which shall be paid by Client to photographer for use prior to receipt of payment by Photographer shall be three (3) times Photographer's customary fee for such usage

27 Provision B; and 28
4

8050-0131-Z06640

Case 2:04-cv-00621-SRB

The document is incorrectly Document 242 dated a year early. Filed 06/22/2006 18

Page 18 of 35

1 2 3 4 5 6 7 8

H. Copyright Protection/Credit Line: For Editorial use, credit line in the form Copyright "© 2002 DanCoogan.com" in type no smaller than that of related text must appear adjacent to or within the photograph(s) or fee is tripled; Client acknowledges that such a triple fee is fair and reasonable for photographer's loss of recognition and lack of copyright protection resulting from lack of, or improper, copyright notice/credit line. For NonEditorial use, Client will provide copyright protection by placing proper copyright notice on any use. Proper notice may be either "© Client Name, Year-date of first publication", or "© 2002 DAN COOGAN" adjacent to or within the photograph(s). WEB Credit: If image is used on the clients web site, credit line in the form Copyright "© 2002 DanCoogan.com" will act as a live link to http://www.DanCoogan.com."

9 Provision H. 10 11 77. 78. Avnet served no rebuttal report to Weisgrau's Expert Report. The same Expert, also one who dealt with Public Relations agencies during

12 his 15-year term as term Executive Director of the American Society of Media 13 Photographers, and served public relations clients in his 21 year career as a professional 14 photographer, and during that time gained knowledge of the role of photography in public 15 relations, did another scientific analysis and study, producing a supported report on 16 branding using imagery, showing how Avnet did so, intertwining Plaintiff's photographs 17 into all profits Avnet earned. 18 79. Although Weisgrau could not complete his second analysis by June 2005 due

19 to Avnet's wrongdoing in discovery, he was able to do so after Avnet ultimately on 20 December 6, 2005, admitted "public relations", "community relations", "investor 21 relations", "corporate communications" use, with documents provided by Avnet from
5 22 December 1, 2005 to January 5, 2006 , and research documents provided with to

23 Defendants in his January 12, 2006 report on branding and profits entitlement. 24 80. Additionally, during a December 7, 2005 deposition of Whitney A.

25 Crutchley, Avnet Manager of Investor Relations explained "The annual report... can be 26 used as collateral for sales calls, marketing, relationships with suppliers" p. 47, lines 20-21. 27 28
5

Many of which should have been included in Defendants' November 1, 2004 Response to Plaintiff's First Request for Production of242 Documents to Defendants Page 19 of 35 Case 2:04-cv-00621-SRB Document Filed 06/22/2006 8050-0131-Z06640 19

1 "They would be using it as collateral to identify it? A. Correct. Q. Which is basically 2 promotion of the company, isn't it?... THE WITNESS: Yes. p. 48-49, lines 20 to 1. 3 81. Before discovery closed, and well before his March 6, 2006 deposition,

4 Weisgrau ultimately correctly concluded that Avnet used imagery to brand itself before its 5 customers, investors, and others, and that this imagery was Plaintiff's photographs, and 6 opined all of Avnet's profit is relevant and causally related to Avnet's infringement, 7 regardless of which division or geographic divisions earned it, because Avnet used 8 Plaintiff's photographs uniquely to brand itself through its CEO in two of Avnet's one and 9 only yearly Annual Reports, on its one-and-only www.avnet.com home page, and in other 10 ways. When he did so, Weisgrau was aware of Avnet's admitted use of Annual Reports as 11 marketing collateral. 12 13 14 15 16 17 82. Weisgrau then correctly provided profits value:

As previously cited in this report, Avnet considers its ROI on advertising to be 1.5, i.e., a fifty percent return. At the minimum, following Avnet's own prescription, the profits to which Dan Coogan is entitled ought to be no less than 1.5 times whatever his actual damages are in determined to be. At the maximum, since Avnet has not produced "the elements of profit attributable to factors other than the copyrighted work" Coogan's entitlement ought to be $786,900,000. 83. Avnet chose to ignore Weisgrau Report(s) before discovery closed, chose to

18 basically ignore it during Mr. Weisgrau's deposition, and did not seasonably update 19 answers provided in Avnet's Responses to Plaintiff's Fourth Request for Production of 20 Documents relating to "deductible expenses against Avnet's gross revenue" or "elements 21 of profit attributable to factors other than the copyrighted work against Avnet's gross
6 22 revenue" .

23

84.

Avnet served no rebuttal report to either of Weisgrau's Report(s) or any of

24 his opinions. 25 85. When Avnet's Expert, John Trotto ("Trotto") provided his damages estimate,

26 he did so unscientifically, and predominantly based on irrelevant photo shoot (assignment 27 28
6

8050-0131-Z06640

Case 2:04-cv-00621-SRB

Both from 17 U.S.C. § 504(b). Document 242 Filed 06/22/2006 20

Page 20 of 35

1 photography) rates, his subjective assignment-photography rates, and not on the rates of 2 stock photographs. 3 86. Avnet's behavior shows it so anxiously wanted to use Plaintiff's

4 photographs, apathetic to whether they were owned or to who owned them, that Plaintiff's 5 photographs had high stock value to Avnet and that Avnet as a willing buyer would pay a 6 premium for their use. 7 87. Trotto is and was intensely biased, as he is the current Avnet photographer,

8 who has been paid many tens of thousands of dollars by Avnet each year for his work and 9 cooperation. 10 88. Almost immediately after Avnet finally served discovery answers that

11 purportedly disclosed all of its uses of Plaintiff's photographs, Plaintiff's Expert Jeff Sedlik 12 ("Sedlik"), carefully laid out a scientific analysis of why Avnet's stock value amounted to 13 between $646,066.44 and $796,426.60. 14 89. Sedlik is a 20-year professional photography veteran, current and former

15 President of several Photographers' professional groups, has testified before Congress on 16 Copyright issues at the behest of Copyright Office personnel, and teaches Copyright related 17 matters in college level classes. 18 19 90. 91. Avnet served no rebuttal report to Sedlik's Report(s) or opinions. On page 4, line 18 of Defendants Proposed Findings of Fact and Conclusions

20 of Law Avnet states, "Avnet used Plaintiff's photos for public, employee, and investor 21 relations. Avnet did not sell any of Plaintiff's photographs or use them for advertising." 22 However, worse than selling the photographs, Avnet chose to distribute by giving 23 away Plaintiff's photos free to any person(s) with an internet connection for a period of 24 nearly 2 years, crushing their resale value. 25 92. On page 5, line 18 of Defendants Proposed Findings of Fact and Conclusions

26 of Law, Avnet states, "There is no evidence in the record that any third-party has ever 27 shown interest in purchasing stock photographs of Vallee." Yet, Avnet has given away 28 photographs of Vallee for free through its Press Room during the entire time of
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

21

Filed 06/22/2006

Page 21 of 35

1 the infringement with Plaintiff's photographs of Vallee. No one would expect to pay for 2 that which they have been freely given. If at any point after Avnet stopped using Plaintiff's 3 photographs, they still had the power to refer any third parties that contacted Avnet for 4 images of Vallee, directly to the Plaintiff for the use of any of the photographs which were 5 available. Avnet acted as an agent for the Plaintiff's photographs for nearly 2 years, albeit, 6 unknown to Plaintiff and with no compensation to Plaintiff. 7 CONCLUSIONS OF LAW 8 1. The Court previously ruled that Defendants willfully infringed Plaintiff's

9 copyright and that Avnet breached its contract with Plaintiff. As to these issues, only two 10 issues remain, individual liability for Maag and Vallee and Plaintiff's damages. 11 2. Avnet cannot change its admissions of 2002 or 2003 home page use of one of

12 Plaintiff's photographs. Victory Carriers, Inc. v. Stockton Stevedoring Co., 388 F.2d 955,
th 13 959 (9 Cir. 1968).

14 15 16

Individual Liability Copyright Infringement 3. The test for finding a corporate officer jointly and severally liable with his

17 corporation for copyright infringement is whether the officer "has the right and ability to 18 supervise the infringing activity and also has a direct financial interest in such activities." 19 Chi-Boy Music v. Towne Tavern, Inc., 779 F. Supp. 537, 530 (N.D. Ala. 1991). 20 4. The Court previously found that Maag possessed the right and power to

21 supervise the infringing activity, leaving only the question of whether Maag had a "direct 22 financial interest in" the infringing activities as the only showing necessary for Maag to be 23 held jointly and severally liable for Defendants' willful copyright infringement. 24 5. From Maag's deposition there is sufficient evidence of a direct financial

25 interest in the infringement to impose individual liability. Maag's compensation packages 26 with significant bonuses all depend on the performance of Avnet and its profits and values. 27 The evidence shows how much he is paid greatly depends on his effectiveness in 28 promoting Avnet through public relations. Since Maag directed Avnet to use Plaintiff's
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

22

Filed 06/22/2006

Page 22 of 35

1 photographs for public relations, and Maag's compensation package depended on such, he 2 has a direct financial interest sufficient for individual liability and the infringement in this 3 case had a significant impact on Maag's compensation with Avnet. Thus, Maag had a 4 direct financial interest in the infringement and, as such should be held jointly and 5 severally liable for Defendants' willful infringement. 6 6. Vallee's overall compensation also is based on his appearance in the

7 community and that community relations has value to Avnet. That Vallee volunteers for 8 seminar appearances or news interviews freely show its value to Avnet. That Avnet sent 9 out a newsletter to announce this appointment demonstrates this, as well. Vallee's 10 membership in the GCIT and his biography on the GCIT site clearly adds value to his 11 worth as a CEO of Avnet, or Avnet would not promote it. When he received notice of the 12 suit, he, as concurrent GCIT Board Member should have stopped the infringement. He had 13 "the right and ability to supervise the infringing activity" and since his compensation rises 14 and falls on the perceived value of Avnet, Avnet's infringement had a significant impact on 15 Vallee's CEO compensation so as to give Vallee a direct financial interest in the 16 infringement. 17 7. Vallee, who became responsible once sued, had the power to stop the infringement,

18 and saw fit to not stop the infringement as co-Board Members of Avnet and GCIT; 19 moreover, his community service and image figures well into his compensation, which 20 rises and falls as Avnet does and, thus, Vallee should be held jointly and severally liable for 21 Defendants' willful infringement. 22 23 8. Breach of Contract Maag can be liable for breach of contract because he agreed to the contract.

24 The contract states ""Client" refers to the commissioning party or company named above, 25 its representatives, successors, assigns, agents and affiliates." The contract itself

26 identifies both Al Maag and Avnet, Inc. as "client". Therefore, Maag was a voluntary 27 party to the contract between Plaintiff and Avnet. He has individual liability. Kuehn v. 28
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

23

Filed 06/22/2006

Page 23 of 35

1 Stanley, 208 Ariz. 124, 131, 91 P.3d 346, 353 (App. 2004); Stratton v. Inspiration 2 Consolidated Copper Co., 140 Ariz. 528, 531, 683 P.2d 327, 330 (App. 1984). 3 4 Damages 9. The owner of an infringed copyright can recover his actual damages and the

5 amount of the infringer's profits causally related to the infringement, to the extent that the 6 two do not overlap. 17 U.S.C. § 504(c)(1); Polar Bear Productions, Inc. v. Timex Corp., 7 384 F.3d 700, 707 (9th Cir. 2004); Mackie v. Riser, 296 F.3d 909, 914 (9th Cir. 2002). 8 10. In lieu of actual damages and profits, a plaintiff may elect, at any time prior

9 to final judgment, to seek an award of statutory damages for all infringements involved in 10 the action. 17 U.S.C. § 504(c)(1); Latin American Music Co., Inc. v. Spanish Broadcasting 11 Systems, Inc., 866 F. Supp. 780, 782 (S.D.N.Y. 1994). 12 11. The maximum statutory award for a willful infringement is $150,000 per

13 each joint and several infringer. 17 U.S.C. § 504. 14 12. Avnet displayed Plaintiff's photographs, and made them available for

15 download on its home page, and secondary web pages knowing and inviting visitors to 16 avnet.com and sub-domains would display Avnet's web pages and Plaintiff's photographs 17 on its home page, and secondary web pages in visitor's screens, also stored in video display 18 memory, random access memory, and or/or fixed disk memory, thus each visitor infringed. 19 Avnet caused, allowed, benefited, profited and contributed to each visitor's infringement(s) 20 while declining to exercise the right to stop or limit it. "One who, with knowledge of the 21 infringing activity, induces, causes or materially contributes to the infringing conduct of 22 another," is held liable as a contributory infringer. Casella v. Morris, 820 F.2d 362, 365 23 (11th Cir. 1987). Avnet is therefore jointly and severally liable for each visitor's

24 infringement and all visitors' infringements. Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 25 259, 261 (9th Cir. 1996). 26 13. Avnet provided its website to the public, including a virtual Press Room, a

27 feature not only allowing display of Plaintiff's photographs, but also download capability 28 of the photographs on its home page and secondary web pages, and knowingly invited
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

24

Filed 06/22/2006

Page 24 of 35

1 visitors to avnet.com and sub-domains to display Avnet's web pages and Plaintiff's 2 photographs and to download Plaintiff's photographs. Avnet benefits from its website in 3 providing information to customers that buy its goods and services, investors, analysts that 4 sell its stock, and others, and is certainly vicariously liable for each visitor's infringement. 5 Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, LTD, 125 S. Ct. 2764 (2005). Even 6 during the brief time period from February 5 to February 25, 2004, Avnet had over one 7 million visitors to its web site on which Plaintiff's Photograph was displayed and available. 8 9 14. Statutory Damages All defendants found liable are liable for the maximum statutory award of

10 $150,000 because "the court must consider the amount of money at stake in relation to the 11 seriousness of Defendant's conduct." Twentieth Century Fox Film Corporation v. Steve 12 Streeter, 2006 U.S. Dist. LEXIS 12358 (D. Ariz. 2006) (citing Pepsico, Inc., et al. v. 13 California Security Cans, et al. 238 F.Supp.2d at 1176 (D. Cal. 2002)). This willful 14 infringement by a large Fortune 500 company, which continued well into this litigation, is 15 "serious" under the law. 16 15. Defendants' infringement saved expenses of what a Fortune 500 company

17 would have expected to pay for photographs used in a two year long public relations 18 campaign with four years' use; Avnet saved over $100,000 not re-printing and continuing 19 to distribute the 2002 and 2003 Annual Reports, for 19 months after suit was filed. 20 Defendants reaped profits as a result of this public relations campaign based on the 21 infringements; Plaintiff lost revenues and his jobs at Avnet due to Defendants' 22 infringement; the Defendants willfully infringed; and Defendants' infringing conduct was 23 wrongful. "`Factors the Court can consider in determining the amount of a damages award 24 [under § 504(c)] are: the expense saved by the defendant in avoiding a licensing

25 agreement; profits reaped by defendant in connection with the infringement; revenues lost 26 to the plaintiff; and the willfulness of the infringement... The Court can also consider the 27 goal of discouraging wrongful conduct.' Controversy Music v. Shiferaw, 2003 U.S. Dist. 28 LEXIS 15224, 2003 WL 22048519 at * 2 (N.D. Cal. 2003) (citations omitted)." Sony
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

25

Filed 06/22/2006

Page 25 of 35

1 Computer Entertainment America, Inc. v. Steven Filipiak, 406 F. Supp. 2d 1068, 1074 (D. 2 Cal. 2005). Maximum damages are, therefore, warranted and necessary. 3 16. The court can also award maximum statutory damages "based upon the

4 egregious and willful nature of the infringement and the damage caused to plaintiff by the 5 infringement, Perfect 10, Inc. v. Talisman Communs., Inc., 2000 U.S. Dist. LEXIS 4564 6 (D. Cal. 2000). Egregious conduct was found in Warner Bros. Entertainment Inc., et al., v. 7 Carmine Caridi, et al., 346 F. Supp. 2d 1068 (D. Cal. 2004) where Caridi was provided 8 complimentary screeners by Warner Bros. Caridi signed an Acknowledgment in which 9 he agreed not to allow the screeners to be copied. In addition, the screeners carried a 10 notice which warned viewers that "any duplication, transmission, or public exhibition of 11 the material contained in this DVD/video cassette is a violation of federal law." Finally, a 12 special disclaimer periodically appeared on screen that reminded viewers that the screener 13 was the property of Warner Bros. Nevertheless, Caridi ignored these warnings and 14 breached his promise not to allow the screeners to be reproduced and, as a result, 15 maximum statutory damages were imposed. Here, as in Caridi, an award of the

16 statutory maximum ($150,000 per work) is warranted. 17 17. In the present case, Defendants obtained an April 9, 2002 limited license in a

18 contract to use Plaintiff's photographs after 1) Defendants infringed Plaintiff's copyright a 19 first time in two fall 2001 Avnet Global Perspective magazines, 2) were told the 20 photographs were registered for copyright in October 2001 and warned of copyright 21 infringement, 3) agreed to a one-year term from April 9, 2002, and 4) were excluded 22 Annual Report use, and third-party transfer use. By October 2002, defendants ignored their 23 license, breached the contract and released the Avnet Annual Report with Plaintiff's 24 photograph (and were preparing it earlier). Defendants used Plaintiff's photographs 25 extensively from April 2003 to February 2004, inducing a public relations campaign with 26 no less than four issues of Avnet Global Perspective, another Annual Report, transferring 27 the image to several third parties for literally publicity use, and then posting Plaintiff's 28 image on its one and only home page at www.avnet.com, until Defendants were caught
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

26

Filed 06/22/2006

Page 26 of 35

1 infringing again! Defendants not only actively transferred Plaintiff's photographs to third 2 parties for them to be used; Defendants permitted unlimited third-party download of 3 Plaintiff's photographs from the Avnet website. This was egregious willful 4 infringement. 5 6 18. 19. Thus, maximum statutory damages are appropriate, here, as in Caridi. Maximum statutory damages are appropriate, here, based on the willfulness

7 of defendant's infringement and the bad faith defendant has demonstrating in answering 8 discovery or answering it timely. Peer Int'l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 9 1337 (9th Cir. 1990) (quoting Harris v. Emus Records Corp., 734 F.2d 1329, 1335 (9th 10 Cir. 1984)). "...it is appropriate that...[Plaintiff] be awarded significant statutory damages. 11 See Fitzgerald Publ'g Co. v. Baylor Publ'g Co., Inc., 807 F.2d 1110, 1117 (2d Cir. 1986) 12 (noting that in determining the appropriate level of statutory damages under § 504(c) of 13 the Copyright Act, courts may consider "whether a defendant has cooperated in providing 14 particular records from which to assess the value of the infringing material produced"). 15 Here, Defendants waited one and one-half years to answer an interrogatory the way it 16 should have been answered. They did not identify all uses on November 1, 2004 as 17 discovery requires, because it is obvious when they did, they did either no or a poor 18 investigation in both November 2004, but also by March 30, 2005, when first 19 supplemented. Defendants also withheld many documents all of which should have been 20 provided on November 1, 2004, until December 2005 and January 2006 making the 21 discovery schedule unworkable within set time parameters. 22 20. Here, while the Court has ruled Plaintiff's collected works as one work,

23 statutory damages, are to be "for which any one infringer is liable individually, or for 24 which any two or more infringers are liable jointly and severally" 17 U.S.C. § 504(c)(1). 25 26 21. Actual Damages "Actual damages" are "the extent to which the market value of a copyrighted

27 work has been injured or destroyed by an infringement." Mackie, 296 F.3d at 914; Frank 28 Music Corp. v. Metro Goldwyn-Mayer, Inc., 772 F.2d 505 (1985).
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

27

Filed 06/22/2006

Page 27 of 35

1

22.

The work's market value is "what a willing buyer would have been

2 reasonably required to pay to a willing seller for [the owner's] work" at the time of the 3 infringement. Polar Bear, 384 F.3d at 707; Mackie, 296 F.3d at 917; Frank Music, 772 4 F.2d at 512. 5 23. The Vallee Photographs were stock photographs to Avnet and Avnet showed

6 these images were very desirable to Avnet, and that they had major use value to it. 7 24. Comparing assignment photography values and stock photography values is

8 "like comparing apples and oranges" Baker v. Urban Outfitters, Inc., 254 F. Supp. 2d 346, 9 357-59 (S.D.N.Y. 2003). 10 25. While the market value must be reasonable and based on the use the infringer

11 made (On Davis v. Gap, Inc., 246 F.3d 152, 161 (2d. Cir. 2001); Baker, 254 F. Supp. 2d at 12 357-59; Barrera v. Brooklyn Music, Ltd., 346 F. Supp. 2d 400, 411 (S.D.N.Y. 2004)), an 13 infringer "cannot expect to pay the same price in damages as it might have paid after freely 14 negotiated bargaining, or there would be no reason scrupulously to obey the copyright 15 law". Iowa State University Research Foundation, Inc. v. American Broadcasting Cos., 16 475 F. Supp. 78, 83(S.D.N.Y. 1979). This finding has been applied to both actual damage 17 cases (infra) and to statutory damage cases. See Montgomery v. Noga, 168 F.3d 1282,
th 18 1291 (11 Cir. 1999).

19

26.

Plaintiff seeks actual damages for Avnet's infringements that bear direct

20 relationship to the market value of his stock photographs when considering the totality of 21 its uses, Avnet's contributory infringement liability, its vicarious infringement liability, and 22 how Avnet destroyed Plaintiff's ability to salvage value from them. Assuming each of the 23 million visitors to Avnet's website when Plaintiff's image was on the home page was 24 severally liable for the innocent infringement value of $200, Avnet's contributory or 25 vicarious liability is approximately $200 million. See 17 U.S.C. §504(c)(2). 26 27. The reasonable market value for the infringing uses of Plaintiff's photographs

27 is $XXX,XXX based upon both Mr. Weisgrau's and Mr. Sedlik's updated value for stock 28 photographs.
8050-0131-Z06640

Case 2:04-cv-00621-SRB

Document 242

28

Filed 06/22/2006

Page 28 of 35

1

28.

On Avnet's Press Room7, Avnet invites all visitors to download and use for

2 print purposes and web postings, "photos" and "logos". 3 29. Avnet engaged in the direct sale of Plaintiff's photographs as any service

4 does with goods: For nearly 2 years, albeit unknown to Plaintiff and with no compensation 5 to Plaintiff, Avnet acted as an agent for the Plaintiff's photographs and gave away 6 Plaintiff's photographs of Vallee through its Press Room, and through the rest of its 7 website. Avnet did so during the entire time of the infringement with Plaintiff's 8 photographs of Vallee and profited from such immensely. Each and every download was a 9 sale to buy goodwill and sales; no one would pay for that which they have been freely 10 given. At any point after Avnet's contract expired or if Avnet stopped using Plaintiff's 11 photographs, Avnet still had the power to refer any third parties that contacted Avnet for 12 images of Vallee, directly to the Plaintiff for the use of any of the photographs which were 13 available. 14 30. Avnet logs show that it allowed at least 105,323 downloads of Plaintiff's

15 photographs from its website(s). 16 31. Maag, in his time-of-contract email, offered to pay $500 if the photos were

17 "used by a publication outside our industry", thus indicating "what a willing buyer would 18 have been reasonably required to pay to a willing seller for [the owner's] work." Mackie at 19 917 (quoting Sid & Marty Krofft Television Prods., Inc. v. McDonald's Corp., 562 F.2d 20 1157, 1174 (9th Cir. 1977)). Such Press Room and website download "use" encompasses 21 these multiple distributions, each of which is worth a minimum of the $500 fee offered by 22 Maag . 23 32. Plaintiff's damages are $5,266,500.00, according to Avnet's allowed

24 downloads and its offered amount of $500 each. 25 Avnet's Press Room states: "We hope you will find this site user-friendly and helpful in 26 doing your job. We've included links to our latest press releases and press coverage, and photos and logos that you can download and use for print purposes (.eps or .tif 27 versions) or Web postings (72 dpi versions). You're able also to link to the Investor Relations and Community Relations Web pages. The Company Profile link will take you to 28 Corporate Headquarters in Phoenix, Arizo