Tattoo Art Incorporated v. Tat International LLC
Filing
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 2:10-cv-00323-MSD-DEM Copies to all parties and the district court/agency. [998998410].. [11-2014]
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-2014
TATTOO ART INCORPORATED,
Plaintiff – Appellee,
v.
TAT INTERNATIONAL LLC; KIRK A KNAPP,
Defendants - Appellants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Norfolk.
Mark S. Davis, District
Judge. (2:10-cv-00323-MSD-DEM)
Argued:
October 25, 2012
Decided:
December 10, 2012
Before TRAXLER, Chief Judge, and WILKINSON and AGEE, Circuit
Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Nicholas Shaker Ayoub, WHEELER UPHAM, PC, Grand Rapids,
Michigan, for Appellants. Mark R. Baumgartner, PENDER & COWARD,
PC, Virginia Beach, Virginia, for Appellee.
ON BRIEF:
Christopher Gibbons, DUNN/GIBBONS, Grand Rapids, Michigan, for
Appellants. Kristen R. Jurjevich, PENDER & COWARD, PC, Virginia
Beach, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Plaintiff-Appellee
brought
this
action
Tattoo
Art,
against
Inc.
(“Tattoo
Art”)
Defendants-Appellants
TAT
International, LLC (“TAT”) and Kirk A. Knapp, alleging claims
for copyright infringement and breach of a copyright license
agreement.
partial
The district court granted Tattoo Art’s motion for
summary
action.
judgment
as
to
liability
on
both
causes
of
The district court then conducted a bench trial solely
as to damages and awarded actual damages of $18,105.48 on the
breach
of
Copyright
contract
Act
of
claim
$480,000
and
on
statutory
the
damages
infringement
under
claim.
the
TAT
appeals various aspects of the district court’s rulings as to
both liability and damages.
We affirm.
I.
Tattoo
Art
is
a
Virginia
company
Dufresne, who uses the trade name J.D. Crowe.
owned
by
Joseph
Tattoo Art holds
copyright registrations for hundreds of colorized “tattoo flash”
art designs created by Dufresne.
A tattoo flash is an original
drawing or design of a tattoo printed or drawn on a sheet of
paper or a poster and often displayed on the walls of tattoo
parlors
to
give
customers
design
copy.
2
ideas
for
the
tattooist
to
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To
hundreds
of
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avoid
the
individual
Pg: 3 of 17
cost
of
works,
copyright
Tattoo
Art
registration
grouped
its
for
tattoo
flash designs into “Books” consisting of 50 pages or “sheets.”
Each
sheet,
in
turn,
displayed
numerous
individual
tattoo
designs; Tattoo Art, however, secured only a single copyright
registration
interested
for
each
parties
to
50-sheet
use
its
Book.
Tattoo
copyrighted
Art
flash
licenses
designs
in
tattoos, posters, cell phone covers, and t-shirts among other
things.
In this case, Tattoo Art granted permission to TAT, a
Michigan company owned by Knapp, to use the copyrighted designs.
Among other things, TAT creates and sells stencils for use in
applying temporary airbrush body art.
In December 2005, Tattoo Art and TAT entered into an
agreement
permitting
TAT
to
use
specified
copyrighted
flash
drawings to create stencils for temporary airbrushed tattoos.
According
to
Tattoo
Art,
the
complete
terms
of
the
parties’
agreement were contained within a 10-page typewritten “License
Agreement” (or “the Agreement”), a signed copy of which Tattoo
Art attached and incorporated into its complaint.
Agreement
granted
designs 1
“for
TAT
the
the
right
to
manufacture,
1
use
offer
the
The License
specified
for
sale,
tattoo
sale,
The License Agreement identified 711 individual designs,
most of which were unregistered, covered by the license. There
is no dispute that Tattoo Art held copyright registrations for
(Continued)
3
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advertisement,
promotion,
Licensed Articles.”
was
defined
art.”
Id.
as
shipment,
J.A. 253.
“Stencils
The
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for
licensing
and
distribution
of
the
“Licensed Articles,” in turn,
use
clause
in
applying
limited
airbrush
TAT’s
use
body
of
the
copyrighted flash designs to “the creation and sale of Stencils
for the application of airbrush body art” and permitted TAT to
“distribute
graphic
representations
(including
photographs
and/or posters)” of the tattoo flash designs only if it did so
“in connection with the sale of Stencils.
granted by this License.”
Under
the
No other use . . . is
J.A. 254.
terms
of
the
License
Agreement,
TAT
was
required to make quarterly royalty payments of 12.5 percent of
its gross sales, if any, of licensed articles created pursuant
to
the
License
Agreement,
and
regardless of gross sales.
no
less
than
$6,000
annually,
TAT was also obligated under the
Agreement to provide Tattoo Art with quarterly sales reports.
Finally,
the
License
Agreement
provided
an
initial
term of three years, after which it would continue on a year-toyear basis unless one party elected not to renew, in which case
the Agreement would expire at the end of the 12-month period
during
which
notice
of
212 of these designs
registered Books.
nonrenewal
which
came
4
was
from
given.
24
of
The
Tattoo
License
Art’s
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Agreement also reserved exclusively for Tattoo Art the option of
terminating “in the event of a breach” by TAT.
J.A. 254.
If
the Agreement was not renewed by either party, TAT was permitted
to “dispose of finished Licensed Articles on hand or in process
. . . for a period of twelve (12) months thereafter.”
That
is,
TAT
could
continue
to
promote
and
J.A. 256.
sell
inventory derived from the copyrighted designs.
existing
If, however,
Tattoo Art terminated based on TAT’s breach, TAT was obligated
under the License Agreement to “immediately cease all sales.”
J.A. 257.
TAT concedes that an agreement exists but denies that
the written License Agreement constituted the final agreement.
Instead, TAT claims that Knapp and Dufresne orally modified some
of its terms after Knapp received a fax from Tattoo Art of the
proposed License Agreement on December 29, 2005.
The alleged
modifications included the right for TAT to sell all existing
licensed inventory in the event of termination, regardless of
the
reason,
royalty
and
the
payment.
elimination
According
to
of
the
TAT,
$6000
Tattoo
minimum
Art
annual
promised
to
prepare a revised License Agreement to reflect the alleged oral
modifications.
page
on
its
TAT concedes that Knapp signed the signature
behalf
and
faxed
it
back
to
Tattoo
Art
on
the
understanding that the signature page would be attached to the
“revised”
License
Agreement.
TAT
5
contends,
however,
that
a
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revised Agreement was never prepared or sent and that TAT did
not
receive
a
complete
copy
of
the
signed
License
the
Agreement
signature
until the lawsuit was underway.
Following
the
execution
of
page
by
Knapp, TAT made three of the four required quarterly royalty
payments in 2006, the total of which was $653.
The last royalty
payment was made in October 2006, after which time TAT sent no
further royalty payments or sales reports.
In fact, the parties
apparently had no further contact until February 2009.
In the
meantime, TAT had changed the coloring of Tattoo Art’s designs
and was displaying these re-colored images on TAT’s website to
promote its stencils.
from
the
re-colored
TAT also removed the copyright notice
images
and
referred
to
the
images
years
despite
collectively as its “Original Collection.”
After
having
remained
silent
for
two
TAT’s failure to send royalty payments or reports, Tattoo Art
contacted TAT in February 2009.
TAT promised to come current
with the missed royalty payments and reports but failed to do
so.
On May 14, 2009, Tattoo Art sent TAT a termination letter,
advising TAT to cease any further use of licensed property and
demanding an accounting of all sales up to that date.
termination
was
based
on
TAT’s
“failure
royalties and/or report royalties.”
to
J.A. 835.
pay
the
The
minimum
Nonetheless, TAT
continued to sell stencils derived from the licensed property
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and to use altered designs and artwork in the sale and promotion
of these items on its website.
In July 2009, Tattoo Art filed an action for breach of
the License Agreement and copyright infringement.
mandatory
mediation
provision
in
the
License
Relying on a
Agreement,
TAT
argued that Tattoo Art was required to submit any dispute to
mediation before filing an action to enforce the Agreement.
The
district court agreed and granted TAT’s motion to dismiss.
The
parties then submitted the case to mediation but were unable to
achieve a resolution.
In July 2010, Tattoo Art re-filed the action, again
asserting
claims
for
breach
copyright infringement.
fraudulent
Tattoo
Art
inducement,
unclean
subsequently
motion
for
the
License
Agreement
and
TAT pled the affirmative defenses of
hands
filed
judgment as to liability.
Art’s
of
summary
a
and
motion
equitable
for
estoppel.
partial
summary
The district court granted Tattoo
judgment,
concluding
that
TAT
had
breached the Agreement and infringed on the copyrights held by
Tattoo Art.
The district court then held a bench trial as to
damages, after which it entered an order awarding Tattoo Art
$18,105.48 on the breach of contract claim and statutory damages
under the Copyright Act of $480,000 on the infringement claim.
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II.
A.
TAT
first
challenges
the
district
court’s
grant
of
partial summary judgment in favor of Tattoo Art as to liability
on its breach of contract claim.
We review the district court’s
See Temkin v. Frederick
grant of summary judgment de novo.
Cnty. Comm’rs., 945 F.2d 716, 718 (4th Cir. 1991).
Summary
judgment shall be granted if the movant shows that there is “no
genuine dispute as to any material fact” and that it is entitled
to judgment as a matter of law.
proponent
initially
bears
the
Fed. R. Civ. P. 56(a).
burden
of
demonstrating
absence of any genuine issue of material fact.
F.2d
at
718.
If
the
proponent
succeeds
The
the
See Temkin, 945
in
doing
so,
the
opposing party must present facts sufficient to create a triable
issue.
See id. at 718-19.
obligation
by
producing
Tattoo Art fulfilled this initial
the
signed
License
Agreement
and
presenting evidence that TAT failed to pay royalties or provide
quarterly sales reports required by the Agreement.
TAT responds that the question of whether the parties
orally
modified
the
License
Agreement
presented
an
issue
of
material fact that was not amenable to resolution at the summary
judgment stage.
We disagree.
A party asserting the existence
of a genuine issue of material fact must support its assertion
by
“citing
to
particular
parts
8
of
materials
in
the
record,
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including
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depositions,
information,
affidavits
Pg: 9 of 17
documents,
or
electronically
declarations,
stipulations
admissions, interrogatory answers or other materials.”
Civ. P. 56(c)(1)(A).
record
or
proffer
stored
.
.
.
Fed. R.
TAT failed to point to anything in the
any
evidence
that
would
create
dispute of fact about the terms of the Agreement.
a
material
The sole
support TAT offered for its claim that various terms of the
Agreement had been modified was a copy of the License Agreement
displaying some handwritten margin notes regarding a few of the
disputed provisions.
TAT, however, offered no deposition or
affidavit testimony verifying who made the notes or when they
were made.
Because TAT failed to “point to [any] document that
contains what [it] contend[s] are the definitive terms of the
Agreement,” J.A. 370, the district court had no choice but to
conclude that the version of the License Agreement incorporated
into Tattoo Art’s complaint was definitive.
The
TAT’s
oral
district
court
modification
found
claim,
other
bases
including
merger clause in the License Agreement.
the
for
rejecting
existence
of
a
This clause provided
that the written “Agreement constitutes the entire agreement and
understanding between the parties” and that any modifications of
its written terms were invalid unless contained in “a written
document signed by both parties.”
J.A. 259.
The district court
concluded that the signed signature page reflected TAT’s assent
9
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that
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no
Filed: 12/10/2012
oral
modifications
Pg: 10 of 17
could
be
made
to
the
License
Agreement, and TAT has not argued on appeal that the merger
clause was not part of the License Agreement. 2
We agree with the
district
district
rulings.
court
and
find
no
error
in
the
court’s
Accordingly, we affirm the grant of summary judgment
on Tattoo Art’s breach of contract claim.
B.
“[T]he
Copyright
Act
grants
the
copyright
holder
‘exclusive’ rights to use and to authorize the use of his work
in
five
qualified
copyrighted
work
in
ways,
including
Sony
copies,”
reproduction
Corp.
v.
of
the
Universal
City
Studios, Inc., 464 U.S. 417, 432-33 (1984), and the right “‘to
display
the
copyrighted
Tasini,
533
U.S.
106(5)).
483,
work
496
publicly,’”
n.4
(2001)
N.Y.
(quoting
Times
17
Co.
v.
U.S.C.
§
Under the Copyright Act, “[a]nyone who violates any of
2
The district court also concluded that under Virginia law,
the alleged oral modifications would have been invalid under the
statute of frauds in view of the License Agreement’s initial
term of 36 months.
See Va. Code § 11-2 (mandating that “any
agreement that is not to be performed within a year” must be “in
writing and signed” to be enforceable).
Under certain
circumstances “where there has been part performance,” however,
equity requires that the statute of frauds be avoided and the
oral agreement enforced. T.G. Slater & Son, Inc. v. Donald P. &
Patricia A. Brennan, L.L.C., 385 F.3d 836, 841 (4th Cir. 2004).
We need not address this basis for the district court’s ruling
in light of our disposition on other grounds.
10
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the
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Filed: 12/10/2012
exclusive
rights
of
the
infringer of the copyright.”
Pg: 11 of 17
copyright
owner
.
17 U.S.C. § 501(a).
.
.
is
an
“A licensee
infringes the owner’s copyright if its use exceeds the scope of
ITOFCA, Inc. v. MegaTrans Logistics, Inc., 322
its license.”
F.3d
928,
940
omitted)).
(7th
Thus,
Cir.
2003)
“[o]ne
who
(internal
obtains
quotation
permission
to
marks
use
a
copyrighted” work “may not exceed the specific purpose for which
permission was granted,” Gilliam v. Am. Broad. Cos., 538 F.2d
14,
20
(2d
underlying
Cir.
work
1976),
.
.
.
and
“unauthorized
constitute[s]
an
editing
of
the
of
the
infringement
copyright in that work similar to any other use of a work that
exceeded
the
license
granted
by
the
proprietor
of
the
copyright,” id. at 21.
The district court determined that TAT’s alteration of
the
coloring
website
was
of
Tattoo
beyond
the
Art’s
designs
scope
of
for
TAT’s
display
license
on
under
TAT’s
the
Agreement and therefore constituted copyright infringement prior
to termination of the License Agreement by Tattoo Art in May
2009.
Art
The district court concluded further that because Tattoo
terminated
breach,
from
TAT
any
was
the
License
prohibited
further
use
of
Agreement
under
the
termination.
11
the
as
a
terms
copyrighted
result
of
of
Agreement
the
works
TAT’s
following
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We
Filed: 12/10/2012
agree.
TAT
Pg: 12 of 17
was
given
license
to
use
the
copyrighted tattoo flash artwork to create stencils and to use
copies of the artwork to promote the stencils.
The Agreement
did not license TAT to edit, modify or alter the copyrighted
works it was licensed to display for marketing purposes, and
therefore such use constituted copyright infringement.
post-termination
copyrighted
context,
works
TAT’s
constituted
continued
infringement
display
for
the
In the
of
the
additional
reason that TAT was contractually required to “immediately cease
all sales” of the stencils in light of Tattoo Art’s notice of
termination for breach.
On appeal, TAT argues that the district court should
have permitted it to pursue its equitable estoppel affirmative
defense at trial.
To establish an estoppel defense to copyright
infringement, TAT must show that Tattoo Art “(1) misrepresented
or concealed material facts, (2) intended or expected that [TAT]
would act upon those misrepresentations or concealments, and (3)
had
actual
or
constructive
of
the
true
Service & Training, Inc. v. Data General Corp., 963
facts.”
F.2d 680, 690 (4th Cir. 1992).
record
knowledge
evidence
suggesting
TAT has not directed us to any
that
Tattoo
Art
misrepresented
or
concealed material facts that would have caused TAT, in reliance
upon
such
misrepresentations,
to
12
infringe.
Accordingly,
we
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affirm the grant of partial summary judgment as to liability on
Tattoo Art’s copyright infringement claim.
III.
Following a bench trial on the issue of damages, the
district court issued a 77-page order ruling on numerous issues.
After concluding that TAT owed a total of $20,250 in royalties,
plus
pre-
and
post-judgment
interest
but
less
any
payments
previously made, the district court considered the appropriate
amount
of
damages
to
award
for
the
copyright
infringement.
Under 17 U.S.C. § 504(a), “an infringer of copyright is liable
for
either—(1)
additional
the
profits
copyright
of
the
owner’s
infringer
actual
.
damages, as provided by [§ 504(c)].”
recover
statutory
permits
the
damages
offended
under
17
copyright
.
or
(2)
and
any
statutory
Tattoo Art elected to
U.S.C
owner
.
damages
to
§
504(c)(1),
recover
which
between
a
minimum of $750 and a maximum of $30,000 per infringement of a
given work, “as the court considers just.”
copyright
owner
willfully,
the
shows
that
Copyright
the
Act
In cases where the
infringement
authorizes
was
committed
enhanced
statutory
damages of up to $150,000 per infringed work.
See 17 U.S.C. §
504(c)(2).
The district court concluded that Tattoo Art was not
entitled to enhanced damages even though there was some evidence
13
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of willfulness.
Pg: 14 of 17
The court found that even were it to accept the
explanation offered by TAT at trial for changing the coloration—
that the modified color scheme was a more effective marketing
tool
for
the
stencils—“any
potential
legitimacy
that
such
a
business justification might have had was entirely overshadowed
by the illegitimacy of the circumstances. . . . The very name
chosen
by
[TAT]
for
[its]
[licensed
derivative
the Original Collection is particularly telling.”
Nonetheless,
the
definitively”
infringement.
appropriate
district
that
court
TAT
J.A.
statutory
willfully
709.
Thus,
could
damages
engaged
the
range
court
was
$750
products]J.A. 706.
not
“conclude
in
copyright
determined
the
to
per
$30,000
infringement, as prescribed by § 504(c)(1).
In
determining
the
number
of
infringements
that
occurred, the district court rejected Tattoo Art’s argument that
the display of each individual recolored image was a separate
copyright violation; instead, the district court decided that
each
of
Tattoo
compilation.
See
Art’s
17
registered
U.S.C.
§
101.
“Books”
constituted
“Although
parts
of
a
a
compilation . . . may be regarded as independent works for other
purposes, for purposes of statutory damages, they constitute one
work.”
Cir.
Xoom, Inc. v. Imageline, Inc., 323 F.3d 279, 285 (4th
2003)
(internal
quotation
marks
and
alteration
omitted), abrogated on other grounds, Reed Elsevier, Inc. v.
14
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Pg: 15 of 17
Muchnick, 130 S. Ct. 1237 (2010).
Thus, the district court
concluded that Tattoo Art was entitled to only one award of
statutory damages for each book that was infringed.
images
used
by
books,
the
district
entitled
to
TAT
24
came
from
court
statutory
24
of
Tattoo
determined
damage
that
Because the
Art’s
registered
Tattoo
awards.
Art
Neither
was
party
specifically challenges the court’s method of determining the
number of infringements committed by TAT.
Finally, as to where the district court should fix the
amount of statutory damages for each infringement within the
$750 - $30,000 range, see 17 U.S.C. § 504(c)(1), the district
court
found
that
Tattoo
Art’s
conduct
fell
“closer
to
the
willful end of the spectrum than the innocent end,” J.A. 719,
and set the amount at $20,000, yielding a total of $480,000 for
the 24 infringements, plus pre- and post-judgment interest.
On appeal, TAT does not specifically challenge how the
district
court
arrived
at
this
$20,000
figure.
Rather,
TAT
broadly challenges the total amount of the award, contending
that
it was
damages
grossly
Tattoo
Art
disproportional
could
have
to
the
recovered
amount
under
of
the
actual
Minimum
Royalty payment provision of the License Agreement (purportedly
25 times more) or the amount of unpaid royalties due for TAT’s
actual sales (purportedly 68 times more).
TAT cites State Farm
Mutual Automobile Insurance Company v. Campbell, 538 U.S. 408
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Pg: 16 of 17
(2003), and BMW of North America, Inc. v. Gore, 517 U.S. 559
(1996), to support its argument that the statutory damages award
is subject to proportionality review.
Those cases, however,
involve proportionality review of punitive damages awards, not
statutory damages awards where Congress has limited the district
court’s discretion by establishing a statutory range.
TAT is
essentially arguing that these awards within the statutory range
were
constitutionally
argument.
would
excessive.
This
is
an
unavailing
We review for clear error any factual finding that
determine
the
appropriate
level
of
copyright
statutory
damages, but we review an award of those damages within the
statutory range for abuse of discretion.
L.P.
v.
2001).
Morris
In
Costumes,
this
case,
Inc.,
the
243
See Lyons Partnership,
F.3d
district
789,
court
799
(4th
Cir.
articulated
a
reasonable basis for fixing statutory damages at $20,000, and we
perceive no abuse of discretion or constitutional error in the
district court’s conclusions.
Finally, we reject TAT’s contention that the district
court improperly awarded both actual damages for breach of the
License
Agreement
and
statutory
damages
infringement under 17 U.S.C. § 504(c)(1).
permitted
Tattoo
Art
to
elect
to
recover
for
copyright
The Copyright Act
“either—(1)
the
copyright owner’s actual damages and any additional profits of
the infringer . . . or (2) statutory damages, as provided by [§
16
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Doc: 53
504(c)].”
Filed: 12/10/2012
Pg: 17 of 17
See 17 U.S.C. § 504(a).
Tattoo Art elected and
received statutory damages on its infringement claim; the award
of actual damages was not for the infringement claim but for
TAT’s failure to pay royalties under the License Agreement.
The
election required by the Copyright Act pertains to infringement
claims,
i.e.,
an
infringement
plaintiff
cannot
recover
both
actual and statutory damages for the same act of infringement.
That is not what occurred in this case, however, because the
district court awarded actual damages only for TAT’s breach of
the License Agreement, not for copyright infringement.
IV.
For the foregoing reasons, we affirm the orders of the
district court.
AFFIRMED
17
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