Written by Aaron D. Johnston
On February 2, 2021, the Ninth Circuit issued Desire, LLC v. Manna Textiles, Inc., 2021 WL 345583 (9th Cir. 2021), holding that where one upstream infringer was jointly and severally liable with various downstream infringers (who were not jointly and severally liable with each other) in three distinct infringing distribution chains, plaintiff could only be awarded one statutory award rather than the five awards granted by the district court for each defendant’s infringement of the single work.
By way of background, plaintiff Desire sold fabric with the floral print design at issue to Top Fashion of N.Y., Inc, which then used the fabric with the design to secure a garment order from Ashley Stewart, Inc. When Desire and Top Fashion could not agree on a price for the fabric with the design, Top Fashion showed the floral print design to Manna, which recreated the design with some changes. Manna then sold the fabric with the “new” design to three textile manufacturers, which sold garments to retailers, which then in turn sold the garments to consumers. So, there were three distinct distribution chains—with Manna as the start of each—for a total of seven potential copyright infringers. Desire sued seven defendants: Manna, three manufacturers, and three retailers. (Two defendants settled before trial, reducing seven potential statutory awards to five.)
On summary judgment, the district court held that Desire had a valid copyright in the floral print design and that the design was entitled to broad copyright protection because the floral print was “stylized and not lifelike.” A jury returned a verdict for Desire on its copyright infringement claim, and Desire then elected to recover statutory damages. The district court assessed five awards of statutory damages totaling $480,000, with Manna jointly and severally liable for the entire amount—while downstream infringers such as retailer defendants were not jointly and severally liable with the other infringers.
The Ninth Circuit affirmed the district court’s holding that Desire held a valid copyright entitled to broad copyright protection but took issue with the multiple statutory awards—even while agreeing with the district court’s conclusions on joint and several liability.
First, the Ninth Circuit agreed with the district court that “where an upstream defendant causes, whether directly or indirectly, a downstream defendant’s infringement, the upstream defendant is a joint tortfeasor in, and therefore jointly and severally liable for, the plaintiff’s harm caused by the downstream defendant’s conduct.” Moreover, “where a downstream infringer’s conduct is not the legal cause of the upstream defendant’s infringement, the downstream infringer will not be responsible, jointly and severally, for the upstream defendant’s wrongdoing.” The Ninth Circuit noted that an upstream infringer was a “but for” cause of downstream infringement while no downstream infringer was a “but for” cause of an upstream infringement. In other words, the retailers were not responsible for Manna’s sale of fabric with the infringing design to manufacturers; the retailers were only responsible for the sale of garments with the infringing design to consumers.
Second, the Ninth Circuit disagreed with the district court on the number of statutory damages awards and instead held that Desire was only entitled to a single statutory award where (1) only one work was infringed and (2) at least one defendant was held jointly and severally liable with all other infringers.
The Copyright Act, 17 U.S.C. Section 504(c)(1), states that a copyright owner is entitled to recover “an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally.” There was clearly only one copyrighted work infringed—the floral design print. Moreover, the Ninth Circuit underscored that the language of Section 504(c)(1) indicates that a copyright owner is entitled to one statutory award when “any two or more infringers are liable jointly and severally.” The Ninth Circuit reasoned that “[n]othing in the Act’s text requires complete joint and several liability to limit the plaintiff to ‘an award.’”
Here, the Court concluded that because Manna was jointly and severally liable with the other infringers, only one award of statutory damages was available. To find otherwise, the Court held, would allow for a windfall to the copyright owner, given that only one work was infringed but the recovery would potentially be multiplied by the number of infringers involved. Moreover, “requiring complete joint and several liability among all defendants in order to limit the plaintiff to one award for one work would lead to disparate treatment of infringers depending on the relationship between downstream infringers.” Furthermore, the Court stressed that requiring complete joint and several lability was illogical because it would mean that those with greater liability would only risk paying one statutory award while those with lesser liability (i.e., those not jointly and severally liable with other infringers) would be at risk for separate statutory damages awards. The Ninth Circuit thus concluded that a copyright owner is entitled to only one statutory award where one work is infringed and an upstream infringer is jointly and severally liable with a downstream infringer, even where the downstream infringer is not jointly and severally liable with any other party.
The dissent argued that the majority’s logic will incentivize a plaintiff to sue various defendants in separate actions—or indeed to refrain from suing the joint tortfeasor such as Manna altogether—so as to prevent parties from being found jointly and severally liable, thus increasing the number of statutory awards. The majority in Desire recognizes this risk but still believes that its decision will avoid “vastly disproportionate damages awards that would flow from a contrary interpretation of Section 504(c)(1).”