Stellar Records, LLC v. Hawkins

Filing 20

MEMORANDUM DECISION AND ORDER - IT IS ORDERED: 1. Plaintiffs Motion for Default Judgment and Supporting Memorandum of Law (Dkt. 17 ) is GRANTED. Hawkins is ordered to pay Steller $285,750.00 in damages. 2. Plaintiffs Motion to Compel (Dkt. 15 ) is DEEMED MOOT based upon Plaintiffs statement in the motion for default judgment that the request is being withdrawn. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
STELLAR RECORDS, LLC,
Case No. 4:17-cv-00390-BLW
Plaintiff,

MEMORANDUM DECISION AND
ORDER

v.
CYLE HAWKINS,
Defendant.

The Court has before it Plaintiff’s Motion for Default Judgment and Supporting
Memorandum of Law (Dkt. 17). Stellar commenced this action on September 19, 2017,
for Defendant’s infringement of 381 of Stellar’s copyrights in musical sound recordings.
Defendant Cyle Hawkins was personally served with the summons and Complaint on
October 1, 2017 (Dkt. 10). Hawkins never responded, and the Clerk of Court entered
default on December 1, 2017.
According to the Complaint, Stellar purchased a hard drive from Hawkins
containing illicit copies of its sound recordings in September 2016 (Dkt.1, ¶14 and
attached Ex. B). In an earlier motion for discovery, Stellar stated that without conducting
discovery, it could not prove how long Hawkins has been engaged in the illicit activity,
the amount of gross revenue generated therefrom, or whether other entities or individuals
have assisted him. Therefore, Stellar requested leave to conduct discovery in this case
prior to the entry of default judgment so it could identify any other individuals or entities

MEMORANDUM DECISION AND ORDER - 1

who may have acted with Hawkins in infringing Stellar’s copyrights, and in establishing
the revenue generated by Hawkins from his illicit activities, so that Stellar could make an
informed election of damages pursuant to 17 U.S.C. §504. The Court granted the request
for discovery (Dkt. 14). However, Hawkins failed to respond to the discovery requests,
and Steller now seeks a default judgment.
Pursuant to §504 of the U.S. Copyright Act (17 U.S.C. §504), Stellar may elect, as
damages for Hawkins’ infringement of its copyrights, either its actual damages and
Hawkins’ additional profit arising from his acts of infringement (§504(a)(1) and (b)), or
statutory damages (§504(a)(2) and (c)). In establishing an infringer’s profits, a copyright
owner is only required to present proof of an infringer’s gross revenue arising from the
infringing activity (17 U.S.C. §504(b)). Stellar’s election of damages can be made at any
time before “final judgment is rendered” (17 U.S.C. §504(c)(1)).
Statutory damages of “not less than $750 or more than $30,000 as the court
considers just” are available to the prevailing copyright owner. 17 U.S.C. § 504(c)(1).
Where infringement is willful, “the court in its discretion may increase the award of
statutory damages to a [maximum of] $150,000.” 17 U.S.C. § 504(c)(2).3 “Willfulness
occurs where an infringer acts with knowledge that the [infringer’s] conduct constitutes
copyright infringement.” Unicolors, Inc. v. Kohl’s Dep’t Stores, Inc., 2017 WL 2719983,
*3, C.D. Cal. 2017) (citing Evergreen Safety Council v. RSA Network Inc., 697 F.3d
1221, 1228 (9th Cir. 2012). “A court may infer willfulness from a defendant’s failure to

MEMORANDUM DECISION AND ORDER - 2

defend.” Id. Courts generally consider the following factors to determine the amount of
statutory damages:
(1) the expenses saved and the profits reaped; (2) the revenues lost by the
plaintiff; (3) the value of the copyright; (4) the deterrent effect on others
besides the defendant; (5) whether the defendant's conduct was innocent
or willful; (6) whether [the] defendant has cooperated in providing
particular records from which to assess the value of the infringing
material produced; and (7) the potential for discouraging the defendant.
Id. (citing Apple Inc. v. Psystar Corp., 673 F. Supp. 2d 926, 928 (N.D. Cal. 2009).
Here, the Court infers willfulness from Hawkins failure to defend. Further,
the Court finds that the seven factors warrant a large award of statutory damages
because Hawkins has rebutted none of them. Most notably, the Court takes issue
with Hawkins complete failure to cooperate in providing any records from which
to assess the value of the infringement, and Hawkins must be discouraged from
such infringement.
Steller produced evidence of lost profits in the amount of $58,978.00. This is
based upon the following information: Steller’s profit on the sale of each karaoke
recordings was $1.80 (Viveiros’s Declaration, ¶16). Each of the 86 hard drives sold by
Hawkins contained copies of 381 separate recordings for which Steller owns the
copyright, totaling 32,766 separate sales (acts of infringement) of Steller’s works by
Hawkins. Thus, Steller’s actual damages are computed by considering 32,766 separate
sales by Hawkins, multiplied by profit per sale of $1.80, for total lost profits of
$58,978.00 (Hopkins’s Declaration, ¶8).

MEMORANDUM DECISION AND ORDER - 3

But as allowed by statute, Steller asks for statutory damages instead of lost profits.
Specifically, Steller asks for $5,000.00 per work infringed, noting that it equals only 17%
of the statutory damages available for non-willful infringement, and only 3.3% of the
maximum allowable for willful infringement. In total, Steller requests $1,905,000.00.
Although the Court understands Steller’s frustration in this matter, the Court finds
Steller’s request grossly excessive. Section 504(c) specifically states that an award of
statutory damages for all infringements involved in an action, with respect to any one
work, may not be less than $750 or more than $30,000 “as the court considers just.” 17
U.S.C. § 504(c)(1). And where the infringement was willful, the Court “in its discretion”
may increase the award to not more than $150,000. 17 U.S.C. § 504(c)(2). Here, given
the nature of the infringement, and the evidence of Steller’s lost profits, the Court finds
that the just result is $750 per infringement (381), totaling $285,750.00. This is almost
five times Steller’s lost profits and is more than sufficient to compensate Steller and
discourage Hawkins from further infringement.
ORDER
IT IS ORDERED:
1. Plaintiff’s Motion for Default Judgment and Supporting Memorandum of Law
(Dkt. 17) is GRANTED. Hawkins is ordered to pay Steller $285,750.00 in
damages.

MEMORANDUM DECISION AND ORDER - 4

2. Plaintiff’s Motion to Compel (Dkt. 15) is DEEMED MOOT based upon
Plaintiff’s statement in the motion for default judgment that the request is
being withdrawn.

DATED: October 31, 2018
_________________________
B. Lynn Winmill
Chief U.S. District Court Judge

MEMORANDUM DECISION AND ORDER - 5