Summary
This Ninth Circuit opinion resolves a dispute over vicarious copyright infringement involving Rearden, LLC's facial motion capture software used during the production of Disney's Beauty and the Beast. The panel reversed the district court's grant of judgment as a matter of law, determining that sufficient evidence supported the jury's conclusion that Disney possessed the practical ability to supervise and control its contractor's infringing conduct. The court also affirmed the lower court's decision to strike Rearden's demand for a jury trial on disgorgement of profits, holding that neither the Copyright Act nor the Seventh Amendment provides such a right.
Topics
Practice areas
Questions Presented
- Whether the evidence was legally sufficient for a jury to find that Disney had the practical ability to supervise and control DD3's allegedly infringing use of MOVA for purposes of vicarious copyright liability.
- Whether the Copyright Act provides a statutory right to a jury trial on disgorgement of profits under 17 U.S.C. § 504(b).
- Whether the district court committed reversible procedural error by striking the jury demand on disgorgement of profits mid-trial and converting the jury's role on that issue to advisory.
- Whether the district court abused its discretion by excluding portions of Rearden's damages expert testimony on apportionment of profits.
- Whether the district court abused its discretion by excluding evidence of DD3's indemnification agreement with Disney under Federal Rule of Evidence 403.
Holdings
- A reasonable jury could find that Disney had both the legal right and the practical ability to supervise and control DD3's allegedly infringing use of MOVA. The district court therefore erred in granting Disney judgment as a matter of law.
- The court did not decide whether vicarious copyright liability always requires proof that the defendant could identify or recognize specific conduct as infringing. Even assuming such a showing is required, the evidence here was sufficient for the jury to find that Disney could identify DD3's use of MOVA as potentially infringing.
- Section 504(b) of the Copyright Act does not provide a statutory right to a jury trial on the disgorgement-of-profits remedy.
- The district court did not commit reversible error by striking the jury demand on disgorgement of profits mid-trial and treating the jury as advisory because Rearden had no right to a jury on that remedy and failed to show demonstrable prejudice.
- The district court did not abuse its discretion by excluding Rearden's expert testimony on apportionment of profits because the expert failed to provide a cogent methodology and lacked an adequately explained basis for qualification.
- The district court did not abuse its discretion under Federal Rule of Evidence 403 by excluding evidence of DD3's indemnification agreement with Disney.
Key quotations
“We need not and do not resolve the legal question of whether vicarious liability always requires proof that the defendant has the practical ability to “identify” or “recognize” specific conduct as infringing.” (17)
“To limit vicarious liability to situations where infringement can be identified with certainty would effectively preclude vicarious liability in any situation where copyright ownership is actively disputed or where the direct infringer has a nontrivial fair use defense.” (24)
“We agree with the majority of district courts and hold that § 504(b) does not provide a statutory jury trial right on the disgorgement of profits remedy.” (27)
““absent some demonstrable prejudice,” we conclude that it was not reversible error for the district court to declare the jury advisory after Rearden had presented much of its case-in-chief.” (35)
Factual background
Rearden owned the copyrighted MOVA facial-motion-capture software. Digital Domain 3.0 used MOVA during production of Disney's Beauty and the Beast under a contract giving Disney broad control over DD3's work, including review rights and the ability to terminate for copyright infringement. Disney representatives attended the MOVA capture sessions, reviewed software output, and participated in the production process. Evidence also showed a public dispute over DD3's authorization to use MOVA and the appearance of a Rearden copyright notice on computers used during the sessions.
Procedural history
Rearden sued Disney in the Northern District of California for vicarious and contributory copyright infringement arising from Digital Domain 3.0's use of Rearden's MOVA facial-motion-capture software during production of Beauty and the Beast. The district court granted summary judgment to Disney on contributory infringement and initially granted summary judgment on actual damages, later allowing the actual-damages claim to proceed. During trial, the court struck the jury demand on disgorgement of profits but empaneled an advisory jury. The jury found Disney vicariously liable and awarded actual damages; the district court adopted the advisory profits verdict, then granted Disney JMOL. The Ninth Circuit reversed the JMOL ruling, affirmed the rulings concerning the profits jury demand and evidentiary exclusions, and remanded.
Remand instructions
Reverse the district court's grant of JMOL in favor of Disney on Rearden's vicarious copyright liability claim and remand for further proceedings consistent with the opinion. The rulings striking the jury demand on disgorgement of profits and excluding the expert testimony and indemnification evidence remain affirmed.