In a dispute over the alleged infringement of a floral print textile design, the US Court of Appeals for the Ninth Circuit affirmed the plaintiff’s ownership of a valid copyright, but reversed and remanded for further proceedings on the issue of statutory damages, finding that the Copyright Act permits only a single award of statutory damages where multiple named defendants infringed one work. Desire, LLC v. Manna Textiles, Inc., et al., Case No. 17-56641 (9th Cir. Feb. 2, 2021) (Bennett, J.) (Wardlaw, J., concurring in part, dissenting in part). Judge Wardlaw’s dissent argued that the majority’s ruling limiting statutory damage awards was contrary to controlling Ninth Circuit precedent

Desire, a Los Angeles-based fabric supplier, sued Manna Textiles and several manufacturer and retail defendants for willful copyright infringement when Manna created a fabric design based on Desire’s two-dimensional floral print textile design, which Desire registered with the US Copyright Office in June 2015. Manna sold the copied floral textile design to the other defendants, which created and sold women’s garments made from the fabric.

After a jury trial, the jury found that Manna and two other defendants willfully infringed Desire’s textile design, and that two other defendants innocently infringed the design, and awarded statutory damages ranging from $10,000 to $150,000 against each defendant. The defendants appealed.

The Ninth Circuit readily affirmed the district court’s holding that Desire owned a valid copyright in its textile design, and noted that the district court was correct to extend broad copyright protection to the design. In particular, the Court confirmed that the Desire floral textile was sufficiently original and independently created, and that the originality of the stylized (rather than “lifelike”) flowers warranted broad protection.

The Ninth Circuit dedicated the majority of its opinion to its finding that the district court erred in permitting multiple awards of statutory damages. First, the Court determined that the district court correctly apportioned joint and several liability among the defendants by assessing which defendants were responsible for which acts of infringement based on the defendants’ distribution or sale of the fabric among one another or to end consumers. In short, based on a particular defendant’s upstream or downstream position in the distribution chain, and the “but for” cause of infringement within the chain, a defendant could be jointly and severally liable with certain other defendants, but not all defendants could be jointly and severally liable with all other defendants.

When statutory damages under 17 USC § 504(c)(1) (c)(1) are elected in lieu of actual damages and profits, ) the number of statutory damages awards available in a particular matter depends on the number of individual works infringed and the number of separate infringers. Here, the Ninth Circuit affirmed that there was only one work at issue (Desire’s floral print textile) and considered whether the Copyright Act authorizes multiple statutory damages awards where one infringer is jointly and severally liable with all other infringers, but the other infringers are not completely jointly and severally liable with one another. “No” was the answer of the panel majority.

Starting with the statutory text, the Ninth Circuit panel concluded that the plain meaning of §504(c)(1) precludes multiple awards of statutory damages when there is only one work infringed by a group of defendants that have partial joint and several liability amongst themselves through a prime tortfeasor that is jointly and severally liable with every other defendant. In this case, Manna was alleged to be the tortfeasor lynchpin. Desire (and the dissent) argued that all defendants must be jointly and severally liable for all the infringements to limit a plaintiff to a single statutory damages award. The majority, based on its interpretation of the statute’s text, disagreed and rejected a hypothetical from Nimmer’s treatise on copyright law because the cited case (which dealt with 440 separate works) was deemed not applicable to the facts at hand.

Further to its interpretation of the “plain text of the statute,” the Ninth Circuit warned of absurd results and “potentially astronomical statutory damages” that would frustrate the purpose of the Copyright Act if multiple awards of statutory damages were available, i.e., from each defendant in the channel of distribution. Acknowledging that its ruling could also run afoul of the purposes of the Act if a copyright owner decided to sue separate infringers in separate actions, the Court declared that such risk was outweighed by the potential for disproportionate awards and the fact that multiple lawsuits could still be filed (and consolidated), regardless of the Court’s ruling on this point. Thus, affirming the district court’s grant of summary judgment on the ownership and scope of copyright protection, the Ninth Circuit panel reversed and vacated the district court’s grant of summary judgment as to the number of statutory damages awards available, and remanded for further proceedings.

Judge Wardlaw dissented on the point that the plaintiff was entitled to only one award of statutory damages against the five defendants, believing it unnecessary to even reach the question because none of the five copyright infringers was actually found jointly and severally liable with one another by the jury. Wardlaw also opined that the majority’s rule was contrary to the plain language of the statute and conflicted with Ninth Circuit precedent in Columbia Pictures and Friedman, where downstream television stations were each found to be jointly and severally liable with the TV station owner defendant but not with each other. In those cases, the Ninth Circuit rejected the district court’s rationale for disallowing separate statutory damages award.

Practice Note: Given the stark differences in the majority and dissent regarding the language of §504(c)(1), this decision could form the basis for further splits and result in an en banc petition or a certiorari petition.