• Copyright Infringement; Damages for Conversion Reversed
  • March 19, 2015 | Author: William Wesley Hill
  • Law Firm: Sirote & Permutt, P.C. - Birmingham Office
  • This week we present for your consideration two cases: (a) an Eleventh Circuit decision upholding a copyright infringement award against a venue operator for playing five copyrighted songs without a license; and (b) an Alabama Supreme Court decision reversing damages awarded to a farmer for a claim of conversion against a foreclosing bank that took possession of harvested crops.

    Broadcast Music, Inc. v. Evie’s Tavern Ellenton, Inc., No. 13-15871 (11th Cir. 2014) (upholding near $50,000 award of statutory damages, attorney fees and costs for infringing public performance of five songs without proper license).

    Broadcast Music, Inc. (“BMI”) and copyright owners brought suit against Evie's Tavern Ellenton, Inc. (“Evie's Tavern”) for copyright infringement, for publicly performing copyrighted works without the appropriate license. BMI is a performing rights society that enters into licenses with copyright owners granting BMI the nonexclusive right to publicly perform copyrighted songs. BMI and other performing rights societies (like ASCAP and SESAC) then enter into licenses with broadcasters (such as radio) and venues (such as music halls, restaurants, event venues, and bars) to permit the public performance of the copyrighted songs in their places of business in exchange for a royalty.

    Despite having received multiple cease-and-desist letters and telephone calls from BMI, Evie’s Tavern Ellenton, Inc. (“Evie's Tavern”), continued performing copyrighted music without the proper license from BMI. BMI sued Evie’s Tavern for copyright infringement based on the public performance of five songs. The district court granted BMI summary judgment and awarded BMI statutory damages of $3,390.66 per song, or nearly $17,000 total. In addition, the district court awarded $32,517.50 for attorney's fees and court costs, for a total of nearly $50,000. Evie's Tavern appealed.

    Among its arguments on appeal, Evie’s Tavern asserted that the district court abused its discretion in awarding damages because Evie’s was an innocent infringer. The Eleventh Circuit cited prior opinions noting that “the state of mind of the copyright infringer is of no consequence to liability,” and wrote that whether an infringement is innocent or willful is only one consideration among others in calculating a statutory damage award for copyright infringement. According to the Eleventh Circuit, courts consider the following in calculating damages: (1) blameworthiness (innocent or willful); (2) expense saved and profits reaped by the infringer; (3) revenue lost due to infringement; and (4) the deterrent value of the damage award.

    Because the district court awarded damages after considering each of these factors, there was no abuse of discretion by the district court. The Eleventh Circuit, therefore, upheld the award of nearly $50,000 against Evie's Tavern for the unauthorized public performance of five songs, a result that could have been avoided had the venue operator purchased a license from BMI at an annual cost of approximately $1,400.

    Paint Rock Turf, LLC v. First Jackson Bank et al., No. 1130480 & No. 1130528 (Ala. 2014) (upholding denial of emblements doctrine and reversing conversion claim asserted against bank for harvested crop).

    In this case, the Alabama Supreme Court upheld a denial to apply the emblements doctrine for the benefit of a sod farmer and reversed an award to the sod farmer based on the sod farmer’s claim against First Jackson Bank (“First Jackson”) of conversion of harvested sod and equipment post-foreclosure. Paint Rock Turf, LLC (“Paint Rock”), purchased a sod farm and related equipment with proceeds of a loan from First Jackson. The loan was secured by a mortgage on the sod farm and a security interest in the equipment. After the demand for sod dropped during the decline in new homes sales in 2008 and 2009, Paint Rock eventually defaulted on its loan.

    Paint Rock filed a bankruptcy petition, triggering an automatic stay of any act to obtain possession or exercise control of the bankruptcy estate. The bankruptcy court, however, eventually lifted the automatic stay because it found that Paint Rock had used the bankruptcy process to wrongfully prevent First Jackson from foreclosing on the sod farm. Thereafter, First Jackson foreclosed on the sod farm and purchased the property as the highest bidder at auction. First Jackson sent written notice to Paint Rock demanding possession of the sod farm, took possession of the sod farm, and prevented Paint Rock employees from delivering already harvested sod to customers. First Jackson filed an ejectment action against Paint Rock, and Paint Rock counterclaimed based on the emblements doctrine and for conversion of its harvested sod and farm equipment. At trial, Paint Rock lost on its claim under the emblements doctrine but was awarded approximately $30,000 for its conversion claim by a jury. Both parties appealed.

    The Alabama Supreme Court upheld the lower court’s decision that the emblements doctrine did not allow Paint Rock to reenter the property and take possession of sod. “Emblements” are a “growing crop annually produced by labor,” and the emblements doctrine—as codified under Alabama law—entitles a tenant at will to his or her emblements, so long as the crop is sowed before the landlord gave notice to quit. Under Alabama law, a defaulting debtor who is permitted to remain on the land by the creditor is a tenant at will. However, the Alabama Supreme Court rejected Paint Rock’s argument that it was a tenant at will due to the automatic stay entered as part of its bankruptcy petition. The Court recognized the sanctions that would have resulted against First Jackson had it attempted to possess the property during the automatic stay in bankruptcy. According to the Court, “the automatic stay cannot be construed as a grant of permission by First Jackson for Paint Rock . . . to remain on the property.” Therefore, Paint Rock was not a tenant at will. Because Paint Rock was not a tenant at will, the emblements doctrine was not applicable, meaning Paint Rock was not entitled to the sod sown prior to First Jackson’s notice to vacate the property.

    The Alabama Supreme Court next reversed the near $30,000 award for conversion in favor of Paint Rock. Because Paint Rock did not have a claim under the emblements doctrine to possess the sod after First Jackson’s purchase of the sod farm, it did not have a property interest in the sod that could sustain a claim for conversion. As the Court remarked, “First Jackson could not be liable . . . for conversion of what was then its own property.”