In a recent opinion, Seoul Broadcasting System Intl. v. Ro, an Alexandria U.S. district court granted Plaintiffs a permanent injunction and ordered steep damages against the defendants who were repeat copyright infringers and willfully ignored cease and desist letters, signifying a focus on deterrence to protect copyrights of businesses.
Plaintiffs Seoul Broadcasting Corporation, Mun Hwa Broadcasting Corporation, and KBS America, Inc., profit from the sale and licensing of DVDs and videotapes of their proprietary programming and distribute Korean-language television programming in the United States.
Plaintiff accused Defendants, Daewood Video, Inc. and owner Young Min Ro., Korean Korner, Inc., Sun Yop Yoo, of illegally distributing television programming. All Defendants are or were previously in the business of renting or selling videos and had past licensing agreements with Plaintiffs which had expired or were not renewed.
The current opinion is a result of a bench trial held on the issue of damages and other relief. The court previously granted summary judgment of copyright infringement in favor of Plaintiffs.
In copyright actions, courts traditionally grant permanent injunctions if liability is established and there is a continuing threat to the copyright. Opinion at 14, quoting Dea Han Video Prod., Inc. v. Chun, et al., No. 89-1470-A, 1990 WL 265976 at *1311 (E.D. Va. June 18, 1990). The court decided to issue a permanent injunction in this case because the Daewood defendants, with assistance from Korean Korner and Yoo, infringed Plaintiffs’ copyrights continuously over a period of more than a year. And Defendants, save one, all had a history of unlawful copying and selling Korean video programming. Moreover, the ease of making the copies made it more likely Defendants would infringe in the future if a permanent injunction was not entered.
The court considered in depth the damages award. Statutory damages in copyright infringement cases, according to 17 U.S.C. § 504, are significantly higher if the court finds the infringement was done willfully. The damages imposed may be up to $150,000 per act of infringement. Opinion at 16.
“Willfulness may be inferred where there is evidence that infringements continued after warnings or cease and desist letters from the plaintiff.” Opinion at 16, citing Masterfile Corp. v. Dev. Partners, Inc., No. 1:10cv134, 2010 U.S. Dist. LEXIS 100857, 14-15 (E.D. Va. Aug. 16, 2010). All Plaintiffs had sent cease and desist letters to Young Min Ro, owner of Daewood Video.
The court awarded monetary damages, with a significantly higher damages award against Daewood Video, Inc. and owner Young Min Ro due to previous copyright infringement violations and because the court found that they acted willfully by refusing to follow the cease and desist letters. Daewood and Ro, jointly and severally, were ordered to pay $555,000.00. Defendant Yoo, the one defendant without a history of copyright infringement, was ordered to pay a considerably less amount of $16,951. These disparate amounts and steep fines for Daewood and Ro suggest the court’s unyielding desire to deter repeat violators from ignoring laws set up to protect businesses.
A question is whether courts will use refusal to follow cease and desist letters as a justification for high damages awards in suits other than those involving copyright issues.
Thursday, November 17, 2011
Tuesday, June 21, 2011
Spiteful Motives, Lacking Improper Conduct, do not Support Tortious Interference Claim
In a recent opinion, the Supreme Court of Virginia held that actions motivated solely by ill will or personal spite, that don’t include improper conduct, do not support a claim for tortious interference with an at-will contract. The court provided a helpful definition of when conduct is considered improper and decided that it is not enough if the actions were merely spiteful. Click here for the opinion.
The facts of the case involve a Virginia law firm, Dunn, McCormack & Macpherson (“Dunn”), who had an at-will contract with the Fairfax County Redevelopment and Housing Authority (the “Authority”). Dunn had served as legal counsel for the Authority for around thirty years until the Authority terminated the contract in September 2005.
Dunn sued Gerald Connolly (“Connolly”), Chairman of the Fairfax County Board of Supervisors, alleging that Connolly tortiously interfered with Dunn’s contract with the Authority by persuading Authority to break the contract. Dunn claimed that Connolly’s actions were motived solely by his personal spite, ill will and malice, because he didn’t get along with a partner at Dunn.
The circuit court entered an order dismissing the action for Dunn’s failure to provide facts showing Connolly used illegal means or improper methods when he communicated with the Authority. This court reviewed the circuit court’s ruling de novo and came to the same conclusion.
The elements to support a cause of action for tortious interference with contract rights are: (1) the existence of a valid contractual relationship or business expectancy, (2) knowledge of the relationship or expdctancy on the part of the interferer, (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy, and (4) resultant damage to the party whose relationship or expectancy has been disrupted. Additionally, when a contract is at-will, an element is added: the defendant must have employed improper methods. Op. at 6, citing Duggin v. Adams, 234 Va. 221, 226-27, 360 S.E.2d 832, 836 (1987).
The court explained that interference is improper if it is illegal, independently tortious, or violates an established standard of trade or profession. The court quoted the Duggin case, stating:
Methods of interference considered improper are those means that are illegal or independently tortious, such as violations of statutes, regulations, or recognized common-law rules. Improper methods may include violence, threats or intimidation, bribery, unfounded litigation, fraud, misrepresentation or deceit, defamation, duress, undue influence, misuse of inside or confidential information, or breach of a fiduciary relationship. . . .
Methods also may be improper because they violate and established standard of a trade or profession, or involve unethical conduct. Sharp dealing, overreaching, or unfair competition may also constitute improper methods.
234 Va. at 227-28, 360 S.E.2d at 836-37.
Dunn’s argument that Connolly improperly interfered with its terminable at-will contract with the Authority because his actions were motived solely by Connolly’s personal spite, ill will and malice was found to be insufficient. The court found that Dunn failed to appreciate the limited nature of what constitutes “improper” interference. The court stated that it “will not extend the scope of the tort to include actions solely motivated by spite, ill will and malice.” Op. at 7. Because there were no facts alleged that showed improper interference, there was no merit to Dunn’s claim and the action was dismissed.
Thursday, May 12, 2011
District of Columbia Limits Applicability of Computer Fraud and Abuse Act
In a case of first impression, a federal district court in the District of Columbia has joined those courts that restrict the applicability of the federal Computer Fraud and Abuse Act. Previously, we have written about the growing number of cases that have adopted a broad reading of this Act in a way that permits a claim to be made where an employee has accessed an employer's computer and removed proprietary data after deciding to accept a new job. See posts dated March 27, 2009 and September 7, 2010.
The CFAA protects companies from the misappropriation of proprietary information by someone who does not have authorized access to the computer or who has been authorized to access the computer, but who exceeds that authorization. The cases attempt to define the limits of authorized access.
A number of courts following the 7th Circuit's opinion in Int'l Airport Ctrs., LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006) have held that an employee who has been given access to his employer's computer network, loses that right of access as a matter of law when he has decided to accept a new job and downloads proprietary information from the network to use in his new position. Courts adopting this logic posit that such conduct violates the employee's duty of loyalty owed to his employer because, once he has made the decision to leave and has accepted the new position, the employee's interests become adverse to the interests of his current employer. Those courts find that accessing the computer, and copying proprietary information under such circumstances, exceed the authorization that the current employer has provided and violate the CFAA.
Not so in the District of Columbia according to a recent opinion by Magistrate Judge John Facciola in Lewis-Burke Associates, Ltd. v. Widder, 725 F. Supp.2d 187 (D.D.C. 2010), click here. There, the court relied upon the analysis of the 9th Circuit in LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009), which held that, once an employer has authorized an employee to access the company computer, even if for limited purposes, that access is still authorized even if the employee violates those limitations. Id. at 1133. According to Brekka, whether an employee has authorization to access a computer is dependent upon whether the employer has terminated that authorization.
In the District of Columbia case, before he left his job, Widder copied proprietary and confidential electronic files onto a thumb drive that he took with him to his new employer. Some of the copying took place on his last day of work. The court found the Citrin standard to be unworkable and confusing. Instead, it held that Widder did not exceed his authorized access to the system even if he accessed and copied documents he was not entitled to see. Accordingly, the court dismissed the CFAA claim.
Based upon this decision, the CFAA is not an available remedy or a means of creating federal question subject matter jurisdiction in the District of Columbia for the theft of proprietary electronic information, except where the employer has terminated the employee's access rights before the theft occurs.
The CFAA protects companies from the misappropriation of proprietary information by someone who does not have authorized access to the computer or who has been authorized to access the computer, but who exceeds that authorization. The cases attempt to define the limits of authorized access.
A number of courts following the 7th Circuit's opinion in Int'l Airport Ctrs., LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006) have held that an employee who has been given access to his employer's computer network, loses that right of access as a matter of law when he has decided to accept a new job and downloads proprietary information from the network to use in his new position. Courts adopting this logic posit that such conduct violates the employee's duty of loyalty owed to his employer because, once he has made the decision to leave and has accepted the new position, the employee's interests become adverse to the interests of his current employer. Those courts find that accessing the computer, and copying proprietary information under such circumstances, exceed the authorization that the current employer has provided and violate the CFAA.
Not so in the District of Columbia according to a recent opinion by Magistrate Judge John Facciola in Lewis-Burke Associates, Ltd. v. Widder, 725 F. Supp.2d 187 (D.D.C. 2010), click here. There, the court relied upon the analysis of the 9th Circuit in LVRC Holdings LLC v. Brekka, 581 F.3d 1127 (9th Cir. 2009), which held that, once an employer has authorized an employee to access the company computer, even if for limited purposes, that access is still authorized even if the employee violates those limitations. Id. at 1133. According to Brekka, whether an employee has authorization to access a computer is dependent upon whether the employer has terminated that authorization.
In the District of Columbia case, before he left his job, Widder copied proprietary and confidential electronic files onto a thumb drive that he took with him to his new employer. Some of the copying took place on his last day of work. The court found the Citrin standard to be unworkable and confusing. Instead, it held that Widder did not exceed his authorized access to the system even if he accessed and copied documents he was not entitled to see. Accordingly, the court dismissed the CFAA claim.
Based upon this decision, the CFAA is not an available remedy or a means of creating federal question subject matter jurisdiction in the District of Columbia for the theft of proprietary electronic information, except where the employer has terminated the employee's access rights before the theft occurs.
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