Leonard v. Stemtech Health Sciences Inc. et al

Filing 267

MEMORANDUM ORDER granting in part and denying in part re 264 MOTION for Costs and Attorneys' Fee Pursuant to FRCP37(C)(2), denying 250 MOTION for Attorney Fees, denying 258 MOTION for New Trial, denying without prejudice 251 MOTION for Costs. Signed by Judge Leonard P. Stark on 8/13/2015. (rpg) (rpg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
ANDREW PAUL LEONARD,
Plaintiff,
C.A. No. 08-67-LPS (Consolidated)

v.
STEMTECH HEALTH SCIENCES,
INC., et al.,
Defendants.

MEMORANDUM ORDER
Pending before the Court are four post-trial motions, one of which was filed by Plaintiff
Andrew Paul Leonard ("Plaintiff' or "Leonard") and the remaining of which were filed by
Defendant Stemtech Health Sciences, Inc. ("Defendant" or "Stemtech").
BACKGROUND
The factual background and procedural history of this case leading up to the filing of the
pending motions are detailed in the Court's prior opinions. For present purposes, the following
background will suffice.
Plaintiff Leonard brought suit against Defendant Stemtech Health Sciences, Inc. - which
later changed its name to Stemtech International, Inc. ("Stemtech" or "Defendant") - as well as
John Does 1-100, for copyright infringement, in violation of the Copyright Act of 197 6, 17
U.S.C. § 101, et seq., and the common law, relating to certain photographic images created by
Plaintiff. On October 11, 2013, following a four-day trial, the jury returned a verdict finding
Stemtech liable for direct, vicarious, and contributory copyright infringement with respect to two
of Leonard's copyrighted images: Images 3 and 4. (D.I. 229, 230) The jury awarded Plaintiff

1

actual damages of $1.6 million. (Id.)
At the end of the trial, the Court directed the parties to meet and confer and submit a form
of judgment order. (See D.I. 240 at 248) On October 17, 2013, Plaintiffs counsel advised the
Court that the parties were unable to reach agreement upon the form of judgment. (D .I. 231)
The next day, the parties submitted a total of three competing forms of order, which differed
primarily in respect to whether to incorporate an award of prejudgment interest. (D.I. 232, 233)
On October 22, 2013, the Court denied Plaintiffs request for entry of either of its proposed
forms of judgment, without prejudice to Plaintiffs ability to renew its request for an award of
prejudgment interest, following the filing of a motion and full briefing. (D.I. 235)
On November 8, 2013, Plaintiff filed a Motion for an Award of Prejudgment Interest on
the jury's monetary award. (D .I. 241) Defendant opposed the motion and briefing on it was
completed on December 5, 2013. (D.I. 242, 243, 244) On July 8, 2014, the Court issued a
Memorandum Order denying Plaintiffs request for prejudgment interest 1 and ordering the
parties, again, to file a proposed form of judgment. (D .I. 24 7) This time the parties were able to
agree (D.I. 248) and, on July 18, 2014, the Court entered judgment in favor of Plaintiff and
against Defendant (D.I. 249).
Thereafter, the parties filed additional motions. On July 31, 2014, Defendant filed a
Motion For Attorney Fees (D.I. 250) as well as a Motion For Costs (D.I. 251). On August 14,
2014, Defendant filed a Motion For a New Trial or Remittitur. (D.I 258) Finally, on November

1

Exercising its discretion, the Court explained that it was "unpersuaded by Plaintiffs
contention that such an award 'is necessary to fully compensate Plaintiff for misappropriation of
his property and to avoid unjust enrichment to Defendant."' (D.I. 247 at 3) (quoting D.I. 242 at
2)
2

4, 2014, Plaintiff filed a Motion For Costs and Attorney Fees. (D.I. 264) Briefing on the various
motions was completed on November 24, 2014.

STEMTECH'S MOTION FOR NEW TRIAL OR REMITTITUR
Stemtech has asked the Court to grant it a new trial, unless, in the alternative, Leonard
agrees to remittitur of the judgment from $1,600,000 to just $1,804. (D.I. 258 at 18-19) Below
the Court evaluates each of the multiple grounds Stemtech asserts as the bases for its requested
relief.

Legal Standards
Stemtech moves for a new trial pursuant to Federal Rule of Civil Procedure 59(a), which
provides in pertinent part:
A new trial may be granted to all or any of the parties and on all or
part of the issues in an action in which there has been a trial by
jury, for any of the reasons for which new trials have heretofore
been granted in actions at law in the courts of the United States.
New trials are commonly granted in the following situations: (1) where the jury's verdict
is against the clear weight of the evidence, and a new trial must be granted to prevent a
miscarriage of justice; (2) where newly-discovered evidence exists that would likely alter the
outcome of the trial; (3) where improper conduct by an attorney or the court unfairly influenced

the verdict; or (4) where the jury's verdict was facially inconsistent. See Zarow-Smith v. N.J.

Transit Rail Operations, 953 F.Supp. 581, 584 (D.N.J. 1997). The decision to grant or deny a
new trial is committed to the sound discretion of the district court. See Allied Chem. Corp. v.
Da~flon,

Inc., 449 U.S. 33, 36 (1980); Olefins Trading, Inc. v. Han Yang Chem. Corp., 9 F.3d

282, 289 (3d Cir. 1993) (reviewing district court's grant or denial of new trial motion under

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"abuse of discretion" standard).
Where the ground for a new trial is that the jury's verdict was against the great weight of
the evidence - which is the principal, but not exclusive, basis on which Stemtech moves - the
court should proceed cautiously, because such a ruling would necessarily substitute the court's
judgment for that of the jury. See Klein v. Hollings, 992 F.2d 1285, 1290 (3d Cir. 1993).
Although the standard for grant of a new trial is less rigorous than the standard for grant
of judgment as a matter of law - in that the court need not view the evidence in the light most
favorable to the verdict winner - a new trial should only be granted where "a miscarriage of
justice would result if the verdict were to stand," the verdict "cries out to be overturned," or
where the verdict "shocks [the] conscience." Williamson v. Consol. Rail Corp., 926 F.2d 1344,
1352-53 (3d Cir. 1991).
Vicarious Infringement
Stemtech first seeks a new trial on Leonard's claim for vicarious copyright infringement.
In order to prevail on his claim for vicarious infringement, Leonard had to prove: (1) direct
infringement by a third party, (2) Stemtech's right and ability to supervise the infringing conduct
by a third party, and (3) Stemtech's obvious and direct financial benefit from the third party's
direct infringement. See Perfect 10 Inc. v. Amazon, Inc., 508 F.3d 1146, 1179 (9th Cir. 2007);

see also Jury Instr. (D.I. 227) at #22. Although Stemtech challenges Leonard's showing on each
of these elements, the Court finds that the record supports the jury's verdict, which is not against
the clear weight of the evidence.
Stemtech contends that Leonard failed to prove direct infringement by any Stemtech
distributor. (D.I. 258 at 6) Citing broadly to a 107-page swath of trial transcript, Defendant

4

argues that Leonard did not testify specifically about each instance of purported direct
infringement and did not include in his testimony for each infringement the detail that the
unauthorized reproduction of his images occurred on a platform that was owned or operated by a
Stemtech distributor. (Id.) Stemtech further suggests that Photo Researchers, a firm with which
Leonard contracted to license some images, may have authorized some or all of these uses of
Leonard's images. (Id.)
The Court agrees with Leonard that the record contains sufficient evidence from which a
reasonable jury could find that Stemtech's distributors directly infringed Leonard's copyrights.
The jury could reasonably have credited all of the following evidence: (1) testimony by Leonard
that he had valid copyrights for the images involved (see D.I. 261at15 (citing D.I. 237 at
138-50; D.I. 238 at 38-45); (2) testimony regarding the unauthorized use of the copyrighted
images (D.I. 261at15-16; D.I. 238 at 79, 85-86, 90, 98, 100); and (3) testimony regarding the
unauthorized use of the images by Stemtech distributors in association with Stemtech marketing
material and internet links to Stemtech (D.I. 256 at 16; D.I. 238 at 57211-16521 1; PX 51-143).
While the jury was not compelled to credit all of this evidence, it was free to do so, leaving the
finding of direct infringement not against the clear weight of the evidence. 2
In this regard, it is also noteworthy that at trial, Stemtech told the jury that it agreed that

some amount of infringement of Leonard's copyrighted images did occur. In closing argument,

2

With respect to whether Photo Researchers, or any other agent of Leonard's, licensed
Stemtech or its distributors to use Leonard's images, it appears that Stemtech is attempting to
shift the burden to Leonard to disprove an unproven defense. (See D.I. 263 at 1) ("Leonard did
not prove that PR and its agents did not authorize any distributors' use of his images. Thus,
Leonard failed to prove direct infringement by a single distributor.") On the evidence presented,
the jury was free to find that Stemtech's distributors directly infringed Leonard's copyrights.
5

Defendant (through counsel) admitted that some of its distributors did copy Plaintiffs Images 3
and 4 without permission. (See D.I. 240 at 169, 184-85)
Stemtech also challenges Leonard's showing with respect to the second element of
vicarious infringement, that Stemtech had the right and ability to supervise any infringing
conduct of its distributors. Stemtech analogizes its relationship with its distributors with that
between Google and operators of third-party websites, which were found to be outside the
control of Google for purposes of vicarious infringement in Perfect 10, 508 F.3d at 1173. Again,
the Court agrees with Leonard that there was sufficient evidence in the record from which a
reasonable jury could have found that Stemtech had the right and ability to stop the infringing
activities of its distributors. Brian Noar, Stemtech's compliance officer, and George Antarr, a
Stemtech vice president, testified that Stemtech had multiple means of communicating with its
distributors, as well as means to influence the distributors to limit or stop their infringing uses of
Leonard's images, including requiring them to "stay within our [Stemtech's] policies and
procedures" by withholding from non-compliant distributors money and access to essential back
office tools. (D.I. 239 at 251-53, 291-94, 300-04, 309) The contractual and financial
relationship between the defendant and the third parties in Perfect 10 was more limited in scope
than the relationship the jury could reasonably have found existed between Stemtech and its
distributors. It would have been reasonable to find that the threat of termination of
distributorship provided sufficient leverage for Stemtech to rein in an errant distributor whenever
Stemtech chose to do so, particularly given the undisputed evidence the jury heard of Stemtech
succeeding in stopping the unauthorized behavior of certain distributors. (See D.I. 258 Ex. 2,

6

286-87) 3
Stemtech further contends that Leonard failed to establish any obvious and direct benefit
to Stemtech from its distributors' infringement, citing the absence of evidence that distributors'
use of the images attracted customers or new distributors to Stemtech. (D.I. 258 at 9) However,
the jury heard the testimony of Stemtech's Noar, who explained that use of Leonard's images in
Stemtech' s marketing materials assisted in the recruitment of new distributors, and the more
distributors there are the more product that will be sold, and, therefore, the more revenue that
will be generated. (D.I. 239 at 249-50) Another Stemtech witness, Antarr, testified to the
importance of using pictures (and not just words) in marketing materials, to show what a stem
cell looks like. (See id. at 41-42)
In sum, Stemtech has failed to persuade the Court that permitting the jury's verdict of
vicarious infringement to stand would result in a miscarriage of justice, shocks the conscience, or
cries out to be overturned.
Contributory Infringement
Stemtech next seeks a new trial on Leonard's claim for contributory copyright
infringement. In order to prevail on his claim for contributory infringement, Leonard had to
prove: (1) direct infringement by a third party; (2) Stemtech's knowlege that the third party was
directly infringing; and (3) material contribution. See Parker v. Google Inc., 242 Fed. Appx.
3

While the jury would have been free to draw the reasonable inference from this evidence
that Stemtech was unaware of further infringing uses of Leonard's images by its distributors - for
if Stemtech were aware, it surely would have taken steps to stop such infringement, just as it
stopped other distributors' infringing uses - the jury was likewise free to infer from this evidence
that Stemtech could stop other infringing uses but failed to do so. The evidence presented at trial
supported each of these competing conclusions. In such a circumstance, it is for the jury to find
the facts.
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833, 837 (3d Cir, 2007); see also Jury Instr. #24. Although Stemtech challenges Leonard's
showing on each of these elements, the Court finds that the record supports the jury's verdict,
which is not against the clear weight of the evidence.
With respect to the first element, direct infringement by Stemtech's distributors, the
analysis here is no different that that already set out above with respect to the same element of
Leonard's vicarious infringement claim.
Turning next to Stemtech's contention that Leonard failed to prove it had knowledge that
its distributors were infringing, the jury heard from Leonard that he, himself, provided Stemtech
notice of such infringing activity by its distributors. (See D.I. 237 at 19; D.I. 240 at 168) As
discussed above, there was also evidence that Stemtech stopped certain infringing activities of its
distributors, activities of which it was undisputed Stemtech had knowledge. A reasonable jury
could have found from this evidence that Stemtech also came to have knowledge of additional
infringing activities (and for whatever reason chose not to stop them).
The record also supports a finding that Stemtech materially contributed to its distributors'
infringement by knowingly taking steps that were substantially certain to result in direct
infringement by those distributors. See Per:fect 10, 508 F .3d at 1170-71. The jury heard
evidence from which it could have found that Stemtech wanted to use Leonard's images in its
marketing materials, used those images in the marketing materials it distributed to its
distributors, and it required its distributors to use these marketing materials, all in an effort to
drive larger sales and obtain further revenues. (See D.I. 261at18-19) (citing evidence)
In sum, Stemtech has failed to persuade the Court that permitting the jury's verdict of

vicarious infringement to stand would result in a miscarriage of justice, shocks the conscience, or

8

cries out to be overturned.
Damages

Stemtech asserts that the jury's damage award is excessive, based on the wrong standard,
and that Plaintiffs expert, Jeffrey Sedlik, expressed an opinion on damages that was speculative
and unsupported by the evidence. (D.I. 258 at 12-19) Specifically, Defendant claims that
Leonard's actual damages should have been based on amounts Leonard received from licensing
or the amounts used in negotiations between Leonard and Stemtech. (Id. at 14) Stemtech also
attacks Sedlik' s use of multipliers in opining on the estimated value of lost licenses, describing
the multipliers as punitive and, therefore, improperly used in calculating actual damages. (See id.
at 15-16; Ex. 2 at 169-76) In Defendant's estimation, Leonard's actual damages cannot exceed
$1,804. (D.I. 258 at 18-19)
To warrant a new trial on the grounds of excessive damages, the Court must find that the
jury's award (1) is grossly excessive, shocking, or monstrous; (2) is clearly not supported by the
evidence; (3) results in a plain injustice; (4) is based on speculation or guesswork; or (5) is the
product of passion or prejudice. See Garrison v. Mailers N. Am., Inc., 820 F.Supp. 814, 822
(D.Del. 1993); Del Monte Dunes at Monterey, Ltd. v. City o.fMonterey, 95 F.3d 1422, 1435 (9th
Cir. 1996); Eich v. Bd. ofRegentsfor Central Mo. State Univ., 350 F.3d 752, 762-763 (8th Cir.
2003 ). While the $1.6 million damages figure returned by the jury is excessive and surprising,
the Court concludes it is not grossly excessive, shocking, or monstrous, or a plain injustice.
In denying prejudgment interest, the Court held: "The jury's $1.6 million verdict more

than fully compensates Plaintiff for the misappropriated value of his property. As Plaintiffs
expert witness, Professor Jeff Sedlick, testified at trial, $1.6 far exceeds the aggregate value

9

Plaintiff 'received for all of [his] 92 previous licenses Photo Researchers obtained over a 15-year
time period for the use of the Leonard's Image 3 or 4 .... "' (D.I. 247 at 4) (quoting D.I. 243 at
15) There the Court further summarized some of the pertinent damages-related evidence:

The evidence presented at trial showed that from November
1997 through December 2012, Plaintiff (through Photo
Researchers) earned a total of no more than $16,000 for licensing
of the two images at issue at trial. (See D.I. 243 at 2-3, 12) (citing
evidence of total fees earned by Leonard for all licenses to Images
3 and 4) The average fees he earned for commercial use of the
images during that period were under $400 per image. (See id. at
3) (citing evidence) Thus, the license amount implied by the jury's
verdict is an average of approximately $17 ,000 more per infringing
use than Leonard's average commercial license fee actually
obtained by Photo Researchers. (D.I. 243 at 15)
Additionally, the undisputed evidence presented at trial was
that Leonard offered Stemtech yearly licenses to the use of Images
3 and 4 (including usage on the internet) for amounts measured in
the hundreds of dollars, not thousands or millions of dollars. Also,
as Defendant points out, "there was no evidence at trial, let alone a
finding, that Stemtech's conduct was intentional or willful[.]"
(D.I. 243 at 14) Nor did Plaintiff prove that any of the
infringement drove Defendant's sales or caused anyone to sign up
as a distributor for Stemtech.
(D.I. 247 at 4)
All of the foregoing indicates that another reasonable jury could have decided that
Leonard's actual damages were one or two orders of magnitude lower than what the actual
reasonable jury that heard the evidence decided. The $1.6 million awarded can be accurately
characterized as excessive. But that is not an adequate basis for granting the relief sought by
Stemtech. For, as the Court also stated in denying Plaintiff's motion for prejudgment interest,
"none of this means the jury's verdict was unreasonable." (D.I. 247 at 4) (emphasis added)

10

More importantly, none of it - or anything else Defendant has argued - qualifies the jury's actual
damages figure as something that here justifies a new trial.
The $1.6 million actual damages figure is not "clearly not supported by the evidence,"
particularly when one realizes that Stemtech chose to present no damages expert at trial.
Plaintiffs expert, Professor Sedlik, opined that an appropriate lump sum base licensing fee was
$215,767.65, and then further opined that scarcity and exclusivity multipliers should be applied,
resulting in a damages amount of$1,456,431.71 to $2,966,805.33. (D.I. _at 161, 163-66,
173-76)4 Defendant's damages expert ... did not exist. There was no competing expert
testimony for the jury to assess as it determined an appropriate figure for actual damages. Hence,
as Leonard correctly emphasizes, "the amount the jury awarded falls squarely within the range of
damages that the only expert in this case, Professor Jeff Sedlik, testified would be reasonable."
(D.I. 261 at 1) (emphasis added) 5
Other evidence could have been found by the jury to corroborate the reasonableness of
Sedlik's opinions. For example, the jury heard evidence that Leonard had demanded $700,000
for alleged infringement on several websites and for a license to use his images with his
impression. (See DX878, 879, 973, 1020, 1024) Similarly, defense counsel mentioned in

4

Leonard agrees that use of a multiplier would be punitive and inappropriate in
calculating the fair market value of a license, but he takes the view that Sedlik's application of
multipliers was properly based on the scarcity and exclusivity of the images involved. (D.I. 261
at 25-26) The jury was free to credit Sedlik's testimony as to the bases for his multipliers (see
D.I. 239 at 164, 172-77), particularly in the absence of any competing expert testimony.
5

ln addition to not calling its own expert, Defendant also chose to advocate a position on
damages that, in light of all the evidence, the jury might reasonably have concluded was as
unsupportable as Defendant contends Plaintiff's figure is: just $784, or possibly as much as
$1804. (See D.l. 240 at 200, 203)
11

argument that Leonard had made a demand of $300,000 for the use of a single image. (See D.I.
240 at 175) Defendant did not object to admission of evidence of these demands. While these
large dollar figures are not evidence of actual agreements between a willing buyer and a willing
seller, they are at least somewhat probative of fair value (as some indication of the value Leonard
has placed on his property) and may have, in the context of the entire record, caused the jury
reasonably to view Professor Sedlik's figures not unreasonable. (See also generally D.I. 239 at
68-69) (Gerard, whose company represented Leonard in licensing efforts, testifying that his
images were popular for editorial and commercial use)
Plaintiffs licensing agent, Mr. Gerard, provided additional bases from which a jury could
reasonably find that use of Leonard's images was very valuable. Gerard testified that Leonard's
images were "very popular," in part because "for many, many years, they were the only ones [of
their kind] that I could get and the only ones that I could make available to my clients." (D.I. 239
at 48, 49) The images were also "beautiful." (Id. at 50) As a result, Gerard testified, Leonard
"made a significant amount of money" and "the per-image popularity ... was a lot higher for
Andy's material, just because of the subject matter." (Id. at 48, 49) Gerard further explained
how he licensed one of Leonard's images to Time, Inc. for a cover photo on Time Magazine,
which he described as the "Holy Grail ... having that up there with your credit is very, very
significant." (Id. at 53-54)
Finally, while Stemtech devotes a great deal of attention to arguing that Leonard's
damages case is based on nothing more than speculation or guesswork, the Court already rejected
these contentions when it denied Stemtech's Daubert motion to exclude the testimony of
Professor Sedlik. Stemtech particularly emphasizes that "Leonard's own licensing fees should

12

have been used to calculate his actual damages." (D.I. 258 at 13) Of course, Stemtech was free
to retain an expert who could have expressed this very opinion and calculated Leonard's actual
damages based on his own licensing history - but that is not the trial strategy Stemtech chose to
pursue. Importantly, Stemtech has done nothing to overcome the thorough, persuasive analysis
articulated by Judge Burke in his Memorandum Order denying Stemtech's Daubert motion
seeking to exclude Professor Sedlik's testimony. (D.I. 203)
There, Magistrate Judge Burke wrote:
Plaintiff retained Professor Sedlik, a professional
photographer and educator, as an expert in this action, to offer
opinions regarding, inter alia, "licensing issues [and] applicable
damages." (D.I. 177, ex. 3 at 1 & ex. A) Professor Sedlik issued a
Preliminary Expert Report (hereinafter "Preliminary Report") in
which he purported to calculate Plaintiffs actual damages resulting
from the infringement at issue in Leonard I, and opined that
Plaintiff is entitled to actual damages in the amount of at least
$215,767.65. (Id. at 26-29) Professor Sedlik explained this figure
represents "a reasonable estimate oflicensing fees applicable to
the" alleged infringements at issue. (Id. at 26) To arrive at this
figure, Professor Sedlik obtained "comparative stock photography
license fee quotes from several stock photography agencies." (Id.)
Professor Sedlik then calculated a total fee based on these quotes
and on several other factors, including his personal knowledge and
experience in the field. (Id. at 26-27)

Actual damages for copyright infringement are governed by
17 U.S.C. § 504(b), which states that "[t]he copyright owner is
entitled to recover the actual damages suffered by him or her as a
result of the infringement[.]" The purpose of actual damages is to
assess damages from the point of view of the copyright owner and
"compensate the [copyright] owner for any harm he suffered by
reason of the infringer's illegal act." On Davis v. Gap, Inc., 246
F.3d 152, 159 (2d Cir. 2001); see also Am. Bd. of Internal Med. v.
Von Muller, Civil Action No. 1O-CV-2680,2012 WL 2740852, at
*4 (E.D. Pa. July 9, 2012).

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"[F]inding the fair market value of a reasonable license fee
may involve some uncertainty," and such uncertainty "is not
sufficient reason to refuse to consider this as an eligible measure of
actual damages." On Davis, 246 F.3d at 166. Indeed, "when
courts are confronted with imprecision in calculating damages,
they 'should err on the side of guaranteeing the plaintiff a full
recovery."' Id. at 164 (quoting Sygma Photo News, Inc. v. High
Soc y Magazine, 778 F .2d 89, 95 (2d Cir. 1985)).

Here, Professor Sedlik' s curriculum vitae makes clear that
he has extensive experience in the area of photography licensing.
(Preliminary Report, ex. A) For instance, Professor Sedlik is the
current President and CEO of the PLUS Coalition, which is the
international photography industry licensing metadata standards
body. (Id. at 1, 6) He operates a company dedicated to licensing
his own photographic images for various usages, and has served on
advisory boards in which he was consulted on issues including
stock photography licensing. (Id. at 1) Professor Sedlik has
written articles on licensing that have been published in various
photography publications and has taught classes on the subject.
(Id. at 4, 7)

In purporting to calculate Plaintiffs actual damages,
Professor Sidlik did not incorporate the licensing fees that Plaintiff
himself has previously charged clients for the Images, instead
relying on license fee quotes that he obtained from several stock
photography agencies. (Preliminary Report at 26-29) . . . In
making his calculations, Professor Sedlik claims that he also relied
on his "personal knowledge and experience in image licensing."
(Id. at 27) To ensure that the licensing fees corresponded with the
relevant time frame, Professor Sedlik adjusted the fees to 2006
market rates by referencing pricing data that his firm had obtained
during that year. (Id. at 26-27 & exs. L, M, N)

... [T]he caselaw is also clear that actual damages may be

14

calculated in different ways. (D.I. 179 at 13) .... None of the
cases to which Defendant cites stand for the proposition that an
expert calculating actual damages must rely on the plaintiffs past
licensing fees, or that a failure to do so automatically renders an
expert's methodology unreliable, and the Court has not located any
such case .

. . . It may well be true that Professor Sedlik's apparent
choice not to utilize Plaintiff's own previous licensing fees for
Images 3 and 4 (or for other of Plaintiffs images) in calculating
actual damages should affect the weight that the factfinder affords
his testimony; it is certainly a decision that provides fodder for
vigorous cross-examination. . . . However, because the type of
analysis utilized by Professor Sedlik has been expressly accepted
by courts in copyright infringement cases, the Court cannot
conclude that such a methodology - calculating Plaintiffs estimated
actual damages in reliance on quotes from four stock photography
agencies for various usages of similar images - is unreliable.

(D.I. 203 at 3-4, 7-12) (internal footnotes omitted)
Accordingly, the Court concludes that the damages awarded by the jury do not provide a
basis for granting Stemtech a new trial.
Alleged Misconduct
Stemtech next insists that Leonard, his attorney, and his expert witness all committed
various acts of misconduct at trial, resulting in such unfair prejudice to Stemtech's case as to
warrant a new trial. (See D.I. 258 at 19-20) Having presided at the trial, the Court is firmly of
the view that none of the purported misconduct (to the extent it even occurred) unfairly
influenced the verdict.
For example, Stemtech claims that Leonard and his lawyer improperly referred to the
financial disparity between the parties on multiple occasions, pointing out that Stemtech was an

15

"international, multinational or global corporation." (Id. at 20-22) But it was obvious - and
impossible for the jury not to learn - that Plaintiff is an individual and Defendant is a
corporation. As there is a financial disparity between most individuals and most corporations,
this fact, too, was essentially impossible for the jury not to know. Additionally, "International" is
part of Stemtech International' s name, so, again, it was unavoidable for the jury to hear this fact.
(See, e.g., D.I. 220 at 2 (advising jury pool as early as voir dire that "Defendant Stemtech ... was
previously known as Stemtech Health Sciences, Inc. and is now known as Stemtech
International, Inc.") 6 As importantly, Defendant did not attempt at trial to prevent the jury from
learning any of these things. (See D.I. 261at10; D.I. 258 Exs. 9, 10, 11, 12, 13)
Stemtech also faults Plaintiff's counsel for suggesting during closing argument that
Stemtech views its misuse of Plaintiff's copyrighted images as analogous to a parking violation,
in an effort to encourage the jury to apply an improper damages standard. (See D.I. 258 at 23-24;
see also D.I. 240 at 220-21, 224) What Defendant is referring to is a portion of Plaintiff's
rebuttal argument, during which counsel made an analogy between Stemtech' s damages theory
and a person who fails to put money in a parking meter and then responds to the resulting parking
ticket by offering to pay the meter amount rather than a larger fine. (See D.I. 240 at 220-21)
There was nothing objectionable about this fair response to defense counsel's closing argument nor was any objection made to it. Moreover, even if counsel's comment was improper,
considered in the context of all the damages evidence before the jury, the Court is confident that

6

Similarly, in the preliminary instructions, the Court told the jury: "The parties in this
case are the Plaintiff, Andrew Paul Leonard, and the Defendant, Stemtech International, Inc., a
company formerly known as Stemtech Health Sciences, Inc., and which will often be simply
referred to as 'Stemtech."' (D.I. 218 at 1; see also D.I. 227 at Instr. No. 15 (same))
16

the comment did not unfairly influence the verdict.
Stemtech further contends that Plaintiff's use of the word "pyramid" to describe
Stemtech's business organization was deliberately intended to "appeal to the jury's passion and
prejudice." (D.I. 258 at 22-23) But witnesses associated with both parties referred to the
structure of Defendant's business as consistent with a pyramid, in that there is Stemtech at the
top, and below it are top level distributors, and those distributors help recruit other distributors,
and so on. (See D.I. 239 at 258-59 (Stemtech's Noar explaining Stemtech organizational
structure, including responding to contention it is "pyramid" by denying it is illegal pyramid)
Neither Plaintiff nor anyone associated with him improperly inflamed passions by testifying or
arguing that Stemtech is an illegal "pyramid scheme" that makes money by drawing in more
distributors, as opposed to aiming to sell product.
These conclusions become all the more evident when Defendant's current complaints are
put in the proper context of the full trial. In his opening statement, Plaintiff's counsel referred to
Stemtech both as a "multinational corporation" and as having a "pyramid" structure. (D.I. 237 at
105-06) There was no objection during or after Plaintiff's opening, or at any time thereafter.
Consequently, it was entirely reasonable for Plaintiff (and the Court) to conclude that Defendant
had no concerns about Plaintiff's use of these terms. Instead, defense counsel's strategy appears
to have been to confront Plaintiff's characterizations directly, and argue that Plaintiff was trying
to distract the jury from Plaintiff's lack of evidence. For instance, rather than contend that the
organizational structure of her client was irrelevant, Defendant's counsel took the time to
describe it as she thought most favorable, telling the jury: "Stemtech is a direct sales company,
what is known as a direct sales company. And the more commonly known direct sales

17

companies are companies like Amway and Mary Kay." (D.I. 237 at 114) In her closing, defense
counsel argued:
"You also heard a number of times both Mr. Berlage and Mr.
Leonard referred to Stemtech as a pyramid company? Why do
you think they did that? They did that because they need to
get you not to like Stemtech, to have a bad taste in your mouth
about Stemtech, because that's the way they're going to win
their case, because they can't meet their burden under the law,
and they haven't met their burden under the law, so their best
chance is to get you not to like Stemtech."
(D.I. 240 at 207) Defense counsel was free to pursue this strategy- but, having done so (and it
evidently having failed), Defendant cannot now persuasively complain that it received an unfair
trial.
Stemtech makes additional criticisms of Leonard and his attorney, but he fails to make
any persuasive showing that any of them - individually, or collectively- could have unfairly
influenced the verdict. Having sat through trial, and having seen that the fleeting references to
which Defendant cites were not prominent features of the trial, the Court concludes that there is
no "reasonable probability" that the jury's verdict was influenced by what Defendant
characterizes as improper conduct by Plaintiff and his litigation team. See generally Fineman,
774 F. Supp. at 269-70. The Court will not grant Defendant relief on this basis. 7
Purported Evidentiary Errors

As a final basis for obtaining a new trial, Stemtech identifies what it believes are a host of

7

The Court has reviewed the authorities relied on by Defendant and finds they do not
justify a different outcome. Instead, they confirm that the type of advocacy the Court witnesses
from Plaintiff's counsel was within the broad range of what is acceptable under the law. See, e.g,
Draper v. Airco, Inc., 580 F.2d 91, 95 (3d Cir. 1978) ("[W]e wish to emphasize that we do not
expect advocacy to be devoid of passion.").
18

erroneous, prejudicial evidentiary rulings. Stemtech contends that the Court wrongly "affected
the trial's outcome by improperly admitting evidence that: (1) exaggerated the alleged
infringements potentially attributable to Stemtech; (2) supported a legally improper and inflated
damages award; and/or (3) was intended to inflame the jury or cast Stemtech in a bad light."
(D.I. 258 at 25-26) Stemtech supports its contention with a table summarizing items of
"Improper Evidence," listing no fewer than 94 exhibits and portions of testimony of six trial
witnesses.
The Court finds that Stemtech's criticisms do not provide a meritorious basis for ordering
a new trial. All of the evidence of which Stemtech now complains was admitted either over
Stemtech's objection (and in such cases Stemtech has failed to provide any persuasive basis for
the Court to reconsider its earlier decision) or in the absence of any such objection (and in such
cases the Court perceives no basis to provide relief at this late date).
As the Third Circuit has explained - in a case relied on by Stemtech (see D.I. 258 at 25) it is possible for evidentiary rulings to support a new trial (if a court is later persuaded it made a
mistake), but not if "it is highly probable that the error did not affect the outcome of the case."
Goodman v. Pa. Turnpike Comm., 293 F.3d 655, 667 (3d Cir. 2002). Here, it is highly probable
that the purported errors highlighted by Defendant did not affect the outcome of the trial.
See also Fed. R. Civ. Proc. 61 ("Unless justice requires otherwise, no error in admitting or
excluding evidence - or any other error by the court or a party - is ground for granting a new
trial, for setting aside a verdict, or for vacating, modifying, or otherwise disturbing a judgment or
order. At every stage of the proceeding, the court must disregard all errors and defects that do
not affect any party's substantial rights.").

19

Once again, the Court finds no basis for granting Stemtech a new trial.
Remittitur
Finally, Stemtech contends that as an alternative to a new trial, "Leonard could agree to
remit a portion of the verdict in excess of the amount supportable by the evidence." (D.I. 258 at
18) (citing Kazan v. Wolinski, 721F.2d911, 914 (3d Cir. 1983)) The only amount of damages
Stemtech agrees may be justified is $1,804, for direct infringement. (See D.I. 258 at 18) Thus,
according to Stemtech, "unless Leonard agrees to remit $1,598, 196 of the jury's excessive
verdict, a new trial must be ordered." (Id. at 18-29)
For all of the reasons already described, particularly in connection with analyzing
Stemtech's contention that the damages award justifies a new trial (see above), the Court
disagrees with Stemtech. Leonard has, of course, not agreed to the remittitur proposed by
Stemtech, and the Court will not compel Leonard to so agree. Instead, for all the reasons already
given, the Court will deny Stemtech's motion for a new trial.
STEMTECH'S MOTION FOR ATTORNEY FEES
Stemtech seeks to recover $96,686.59 attorney fees it incurred in defending itself in what
has been referred to as Leonard II, the second, related case brought by Leonard against Stemtech.
(D.I. 250 at 11) See Andrew Paul Leonard d/b/a APL Microscope v. Stemtech International,

Inc., C.A. No. 12-86-LPS-CJB (D. Del.). Leonard II was filed on January 27, 2012, less than
two months after Magistrate Judge Burke issued a Report and Recommendation (D.I. 149)
("Report II") recommending that the Court grant Stemtech's motion for summary judgment in
the original Leonard I case, "which had the effect of knocking out Leonard's claims for statutory
damages, attorney fees and profits, leaving only his nominal actual damages [claims]." (D.I. 250

20

at 5) 8 On March 28, 2012, the undersigned Judge adopted Judge Burke's Report II. (D.I. 155)
Ultimately, Leonard If was resolved when the undersigned Judge adopted Judge Burke's
September 19, 2013 Report and Recommendation (D.I. 198) ("Report III") and granted
Stemtech's motion for summary judgment (D.I. 217).
There is no question that Stemtech is the prevailing party in Leonard II. (See, e.g., C.A.
No. 12-86-LPS-CJB D.I. 27) ("In Leonard II, Plaintiff Andrew Paul Leonard, d/b/a APL
Microscope take nothing, the action be dismissed on the merits and Defendant Stemtech
International, Inc. recover taxable costs incurred therein from Plaintiff Andrew Paul Leonard,
d/b/a APL Microscope .... "))
It is also clear that the Copyright Act provides, in pertinent part, that a "court in its

discretion may allow the recovery of full costs by or against any party" and, further, that "the
court may also award a reasonable attorney's fee to the prevailing party as part of the costs." 17
U.S.C. § 505. In exercising such discretion, a court usually evaluates four factors: (1)
frivolousness, (2) motivation, (3) objective unreasonableness (both in the factual and legal

8

A summary of Stemtech's position is as follows:

Leonard II was based upon a claim that Stemtech
directly infringed upon Leonard's Image 3 by
placing that image as the "headshot" on two of its
independent distributors' replicated websites. Yet
years before filing Leonard II, Leonard and his
counsel had actual knowledge that Stemtech's
independent distributors controlled their "headshot
photograph. . . . Based upon the foregoing, Leonard
II was factually objectively unreasonable, thereby
supporting an award of fees to Stemtech.
(D.I. 250 at 9) (emphasis in original although modified in form for consisistency)
21

components of the case), and (4) the need in particular circumstances to advance considerations
of compensation and deterrence. See Lieb v. Topstone Industries, Inc., 788 F.2d 151, 155-56 (3d
Cir. 1986). Having undertaken this evaluation, the Court has determined that the appropriate
exercise of its discretion is to deny Stemtech's motion.
The Court is not persuaded by Stemtech that Leonard II was an "objectively unreasonable
and frivolous lawsuit that was filed in bad faith." (D.I. 250 at 8) Despite evidence Leonard
obtained in Leonard I - which, by the time he filed Leonard II, included evidence that
"headshots" on distributors' websites were placed on those websites by distributors' themselves,
and not by Stemtech- Leonard has reason to believe Stemtech was engaged in ongoing and new
infringement, that was not the subject of Leonard I. He had a non-sanctionable, non-frivolous
basis to file Leonard II.
Stemtech's characterization of Leonard II as being motivated by bad faith, with a purpose
of harassment, and being objectively unreasonable, is contradicted by the objective facts that the
Court denied Stemtech's motion to dismiss and motion for sanctions filed in Leonard II. (See
C.A. No. 12-86-LPS-CJB D.I. 25, 26) 9 In his Report III, which was adopted by the Court
(without objection from Stemtech), Judge Burke found all of the following:
"the filing of Leonard II was not an end-run around
a prior denial of Plaintiffs attempt to amend the
complaint in Leonard I"
•

9

"in light of the late stage of the proceedings in
Leonard I as of January 2012, it is understandable
why- if Plaintiff truly felt that Defendant was
engaging in new, wrongful activity in that month-

Stemtech did not object to Judge Burke's recommendation that these motions both be

denied.
22

Plaintiff chose to file a new lawsuit, instead of
seeking leave to further supplement the Amended
Complaint in Leonard I"
•

"I cannot clearly find that the filing of the instant
case was simply a bad faith attempt to re-litigate
issues that have been decided [against Leonard] in
Leonard I"

•

"the actions of Plaintiff and his counsel here were
objectively reasonable"
"the Court has found that the filing of Leonard II
did not amount to the promotion of improperly
duplicative litigation"

(Id. 25 at 17, 20-21, 25)
In light of these facts, there is no basis for the relief now sought by Stemtech. The Court

will exercise its discretion to deny Stemtech's motion.

STEMTECH'S MOTION FOR COSTS
Stemtech seeks $6,255.30 as taxable costs for being the prevailing party in Leonard II.
(D.I. 251) Leonard has posed objections to the request. (D.I. 257)
Pursuant to D. Del. LR 54.1, the proper procedure is to file a bill of costs, to be reviewed
by the Clerk of Court, rather than a motion seeking judicial review. Thereafter, a party opposing
the Clerk's determination may file a motion for review of that decision. See Fed. R. Civ. Proc.
54(d).
Accordingly, the Court will deny Stemtech' s motion for costs without prejudice to its
right to file a bill of costs.

LEONARD'S MOTION FOR COSTS AND ATTORNEY FEES
Leonard seeks to recover from Stemtech the fees and costs associated with taking the

23

deposition of Stemtech's IT Director, George Tashjian, which Leonard contends was necessitated
"[b]ecause Stemtech denied [certain] Requests for Admission [Requests]," at which, in
Leonard's view, Tashjian "readily admitted that Stemtech's denials to the Requests were wrong."
(D.I. 264 at 1) Leonard explains that "the issue involving these requests was an important part of
Plaintiff's proof, namely, that Stemtech owned certain internet domains and provided its
registered distributors with websites with sub-domains." (Id. at 2) Stemtech denied these
Requests - even though what Leonard asserted was true - and did so without consulting
Tashjian. (See id.) Leonard learned these latter facts only at Tashjian's deposition. Leonard
seeks to recover $2,275 in attorney fees as well as the $773.30 it paid for the transcript of
Tashjian's deposition. (See id.)
Federal Rule of Civil Procedure 37(c)(2) provides:
If a party fails to admit what is requested under Rule 36
[governing Requests for Admission] and if the requesting party
later proves a document to be genuine or the matter true, the
requesting party may move that the party who failed to admit pay
the reasonable expenses, including attorney's fees, incurred in
making that proof. The court must so order unless:

(A)

the request was held objectionable under Rule
36(a);

(B)

the admission sought was of no substantial
importance;

(C)

the party failing to admit had a reasonable ground to
believe that it might prevail on the matter; or

(D)

there was other good reason for the failure to admit.

Stemtech opposes the motion on several grounds. First, Stemtech contends "Leonard
inexplicably and unreasonably waited" to file the motion until nearly two years after Stemtech
24

denied the Requests and approximately 20 months after Leonard believes he proves the denials
were wrongly provided. (See D.I. 265 at 1) The Court disagrees with Stemtech, as it points to no
firm deadline for filing a Rule 37(C)(2) motion, see Chemical Eng'g Corp. v. Essefindus. Inc.,
795 F.2d 1565, 1574 (Fed. Cir. 1986) ("No Rule specifies the time during which a Rule 37(c)
motion must be filed, and as explained in the advisory committee note to Rule 37(c), the Rule is
intended to provide post-trial relief."); evaluating whether the admission sought was of
substantial importance may, in some circumstances, require waiting until very late in a case to
evaluate; and, under the particular circumstances here, Stemtech's litigation strategy- which
appeared to include denying any infringement by its distributors and any control over its
distributors' websites until admitting certain aspects of liability at trial, all rendered Leonard's
delay not unreasonable. Even if such a "motion should normally be deemed waived if it is not
made prior to trial," Mercy v. County of Suffolk, New York, 748 F.2d 52, 55-56 (2d Cir. 1984);

see also Popeil Bros., Inc. v. Schick Elec., Inc., 516 F.2d 772, 778 (7th Cir. 1975) ("We conclude
that Rule 37(c) expenses and fees must be timely sought prior to judgment and appeal, and that if
the judgment is silent in regard thereto, they are deemed waived or denied."), here, with two
consolidated cases, with a magistrate judge handling all pretrial matters, with the lack of
prejudice to Stemtech from Leonard's delay, and given Stemtech's overall litigation strategy, the
Court concludes that Leonard's motion is not untimely.
Stemtech next argues that the Requests were "objectionable and, more importantly, they
were of no substantial importance." (D.I. 265 at 1) Stemtech bases this argument on the fact that
"not a single domain name that was at issue in the responses [to the Requests] was even
mentioned at trial, let alone admitted as evidence;" nor was Tashjian a witness at trial. (Id.)

25

Stemtech unfairly undermines the importance of the evidence sought (and eventually obtained)
by Leonard. The substantial importance of the domain evidence is demonstrated by its use by
Leonard in defeating a Stemtech motion for summary judgment. (See D.I. 266 at 3) Less
directly, the importance of the evidence is shown by the fact that Stemtech could not take certain
positions at trial, knowing that Leonard could prove the contrary, thanks to the Tashjian
deposition transcript, a purpose that could have been served equally as well by proper responses
to the Requests. For instance, as Leonard explains, at trial Leonard could ask Noar- Stemtech's
only witness at trial - "the questions that he did, knowing that he could pull Mr. Tashjian's
transcript should Mr. Noar try and deny these facts" as to the relationship between Stemtech's
conduct and its distributors' infringement. (D.I. 266 at 3) Stemtech also asserts that the
Requests were objectionable as "vague and ambiguous, call[ing] for the premature disclosure of
expert witness information and for a legal conclusion." (D.I. 265 at 6) These objections are
unavailing, as the Requests plainly and properly seek admission of the facts that "Stemtech
provides independent distributors websites with sub-domains of the official Stemtech owned
domain." (D.I. 264 Ex. A at 4) Stemtech offers no explanation for why it would respond to such
requests for factual evidence without even consulting the fact witness who could best answer
them (i.e., Tashjian).
Stemtech's final contention has more merit. Stemtech persuasively debunks Leonard's
assertion that Leonard took Tashjian's deposition because of Stemtech's denials of the Requests.
As Stemtech points out, Leonard noticed Tashjian's deposition more than one month before
Stemtech served its responses to the Requests and only two of 107 pages of Tashjian's deposition
transcript relate to the issues raised in the Requests. (See D.I. 265 at 2) Leonard's briefing

26

contains nothing more than conclusory assertion that he took Tashjian's deposition because of
Stemtech's denials, but this is plainly incorrect.
Ultimately, then, the Court is confronted with a situation in which neither side's position
is entirely meritorious. Leonard is correct that Stemtech should have admitted the Requests and
that the facts Leonard sought to confirm were of substantial importance. The timing of
Leonard's motion, while not ideal, was not so delayed as to unfairly prejudice Stemtech, nor does
it (given the nature of the issues raised) make it more difficult for the Court to resolve. However,
Leonard has wholly failed to persuade the Court that it took Tashjian's deposition because of
Stemtech's denials of the Requests, given the undisputed facts that Leonard noticed the
deposition well before receiving Stemtech's responses and that only a small portion of the actual
deposition was devoted to the issues involved in the Requests.
Under the circumstances, the Court can fathom no better resolution than to rule for each
side in part. Thus, the Court will grant Leonard's motion, but reduce the amount he seeks to
recover by 50%. This result is fair to both sides as it avoids the unfair outcome of awarding
Leonard all of his fees and costs - when they were not all or even mostly necessitated as a result
of Stemtech's improper conduct- and also avoids the unfair outcome of allowing Stemtech to
escape unscathed despite its improper denials of the Requests. 10

10

Leonard filed what appears to be an identical motion in the related case, Andrew Paul
Leonard dlbla APL Microscope v. Stemtech International, Inc., C.A. No. 12-86-LPS (see D.I.
28). By separate order, that motion will be denied as moot. Granting relief in both cases would
amount to an improper double recovery, as the record shows Leonard incurred the fees and costs
sought just once.
27

CONCLUSION
For the reasons stated above, IT IS HEREBY ORDERED that:
1.

Stemtech's Motion For a New Trial or Remittitur (D.I. 258) is DENIED.

2.

Stemtech's Motion For Attorney Fees (D.I. 250) is DENIED.

3.

Stemtech's Motion For Costs (D.I. 251) is DENIED WITHOUT PREJUDICE.

4.

Leonard's Motion For Costs And Attorney Fees Pursuant to Fed. R. Civ. Proc.

37(c)(2) (D.I. 264) is GRANTED to the extent that Stemtech SHALL PAY Leonard fifty percent
(50%) of the costs and fees sought by Leonard.
5.

The Clerk of Court is directed to CLOSE this case.

August 13, 2015
Wilmington, Delaware

HON. LEONARD P. STARK
U.S. DISTRICT COURT JUDGE

28