Bouchat v. Baltimore Ravens Limited Partnership et al
Filing
78
MEMORANDUM OF DECISION ON REMAND. Signed by Judge Marvin J. Garbis on 12/27/2012. (aos, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
FREDERICK E. BOUCHAT
Plaintiff
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vs.
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BALTIMORE RAVENS LIMITED
PARTNERSHIP, et al.
CIVIL ACTION NO. MJG-08-397
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Defendants
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MEMORANDUM OF DECISION ON REMAND
The Court has conducted proceedings, including a bench
trial, on remand of the instant case pursuant to the decision in
Bouchat v. Baltimore Ravens Ltd. P’ship, 619 F.3d 301 (4th Cir.
2010)(hereinafter referred to as “Bouchat 2010”).
The Court now
issues this Memorandum of Decision on Remand as its findings of
fact and conclusions of law in compliance with Rule 52(a) of the
Federal Rules of Civil Procedure.
The Court finds the facts stated herein based upon its
evaluation of the evidence, including the credibility of
witnesses, and the inferences that the Court has found it
reasonable to draw from the evidence.
I.
BACKGROUND
Discussions of the pertinent background can be found in no
less than seven (so far) published decisions of this Court and
the United States Court of Appeals for the Fourth Circuit.1
Accordingly, a brief background statement shall suffice.
In late 1995, the Cleveland Browns football team moved to
Baltimore.
However, because the owner agreed to leave the
Browns’ name in Cleveland for use by a replacement team, a new
name was needed for Baltimore.
In December 1995, while the
owners were considering a name to choose, an amateur artist,
Frederick E. Bouchat (“Bouchat”) created drawings of insignia
that he imagined might be used by the new football team
depending upon the name selected.
These included such names as
the Bombers, the Americans, the Jockeys, etc. and, of course,
“the Ravens.”
Bouchat prepared a drawing for a Ravens team referred to as
the “Shield Drawing.”
1
Bouchat v. Baltimore Ravens, Inc., 241 F.3d 350 (4th Cir.
2001); Bouchat v. Baltimore Ravens, Inc., 215 F. Supp. 2d 611
(D. Md. 2002); Bouchat v. Baltimore Ravens, Inc., 346 F.3d 514
(4th Cir. 2003); Bouchat v. Champion Products, Inc., 327 F.
Supp. 2d 537 (D. Md. 2003); Bouchat v. The Bon-Ton Dept. Stores,
Inc., 506 F.3d 315 (4th Cir. 2007); Bouchat v. Baltimore Ravens
Ltd. P’ship, 587 F. Supp. 2d 686 (D. Md. 2008); Bouchat v.
Baltimore Ravens Ltd. P’ship, 619 F.3d 301 (4th Cir. 2010).
2
By virtue of his creating the drawing, Bouchat obtained common
law copyright rights therein.
A copy of the Shield Drawing was sent by Bouchat to the
head of the Baltimore Stadium Authority and ended up with the
commercial artists retained by the National Football League
(“NFL”) and the Baltimore Ravens team (“the Ravens”)2 to design
the team’s insignia and uniforms.
The artists infringed
Bouchat’s copyright by copying the Shield Drawing and creating
what is referred to as the “Flying B Logo.”
The Ravens used the Flying B Logo as the teams’ primary
logo during the first three seasons, 1996, 1997, and 1998.
Bouchat sued the NFL and Ravens and established
infringement of his copyright in the Shield Drawing by their use
of the Flying B Logo.
Bouchat, however, recovered no damages
due to a jury’s finding that no part of the profits of the
infringers, relating to the infringements then at issue, had
2
In view of the numerous entities involved in the litigation,
the Court’s references to the “NFL” and “Ravens” are intended,
collectively, to refer to all pertinent entities affiliated with
the league and the team respectively.
3
been attributable to the copyright infringement.
This Court’s
Judgment, awarding no damages, was affirmed by the United States
Court of Appeals for the Fourth Circuit.3
In 1999, the Ravens adopted a new logo that has been used
since.
For about eight years, the NFL and the Ravens did not make
any significant use of the Flying B Logo.4
However, in or about
2008, Bouchat found that the Ravens and the NFL were using the
Flying B Logo in three manners:
1.
The sale of season highlight films showing the
1996-98 Ravens on which the Flying B Logo was
visible,
2.
The display at football games of film clips of
Ravens’ teams from 1996-98 on which the Flying B
Logo was visible, and
3.
The display at the Ravens team headquarters of
photographs of players and memorabilia (such as a
first game ticket) on which the Flying B Logo was
visible.
3
Bouchat v. Baltimore Ravens, Inc., 346 F.3d 514 (4th Cir.
2003).
4
There were a few occasions on which the Flying B Logo was used,
apparently by inadvertence – for example on a ticket for a
Packers – Ravens game at Green Bay.
4
Bouchat brought the instant lawsuit, seeking to enjoin
these uses of the Flying B Logo.
This Court, deciding the case on an agreed submitted
record, held that there was no infringement because each of
these uses was a non-infringing fair use under 17 U.S.C. § 107.
Bouchat v. Baltimore Ravens Ltd. P’ship, 587 F. Supp. 2d 686 (D.
Md. 2008).
On appeal, the United States Court of Appeals for
the Fourth Circuit reversed in part.
The Fourth Circuit agreed
with this Court’s holding that the aforesaid headquarters
display was a fair use.
However, the appellate court held that
the sale of highlight films and display of film clips at
football games was not.
The panel’s majority decision stated:
We reverse in part because the Ravens
and the NFL did not establish fair use of
the Flying B logo in the highlight films
sold by the NFL and the highlight film
played during the Ravens home football
games. The films infringe on Bouchat’s
copyrighted work, and his request for
injunctive relief against this infringement
is not precluded. On remand the district
court will consider whether an injunction is
appropriate.
Bouchat 2010, 619 F.3d at 317.
In the Memorandum and Order Re: Permanent Injunction
[Document 52], the Court declined to grant Bouchat an injunction
against future use of the Flying B Logo in the films at issue
5
provided that he receive reasonable compensation for any such
use.
II.
DISCUSSION
A.
Authority to Determine Reasonable Compensation
In Bouchat 2010, the United States Court of Appeals for the
Fourth Circuit held that it must “permit[] the district court to
decide in the first place whether to grant or deny [injunctive]
relief.”
Bouchat 2010 , 619 F.3d at 317 n. 2.
Accordingly, the
appellate court stated that “[o]n remand the district court will
consider whether an injunction is appropriate.”
Defendants
contend that the Fourth Circuit, thereby, restricted this
Court’s authority to issue a decision that does no more than
make the “binary” decision to grant or deny an injunction.
The
Court disagrees.
The case of Abend v. MCA, Inc., 863 F.2d 1465 (9th Cir.
1988), presented a situation analogous to the instant case and a
decision that the Court finds persuasive.
In Abend, the owner
of the copyright on a novel established infringement by the
movie “Rear Window.”
The copyright owner sought an injunction
against distribution of the motion picture.
6
The Abend court recognized that the value of contributions
of non-infringers to an infringing movie can warrant the denial
of injunctive relief, stating:
We are mindful that this case presents
compelling equitable considerations which
should be taken into account by the district
court in fashioning an appropriate remedy in
the event defendants fail to establish any
equitable defenses. Defendants invested
substantial money, effort, and talent in
creating the “Rear Window” film. Clearly the
tremendous success of that venture initially
and upon re-release is attributable in
significant measure to, inter alia, the
outstanding performances of its stars-Grace
Kelly and James Stewart-and the brilliant
directing of Alfred Hitchcock. The district
court must recognize this contribution in
determining Abend’s remedy.
. . . .
The “Rear Window” film resulted from the
collaborative efforts of many talented
individuals other than Cornell Woolrich, the
author of the underlying story. The success
of the movie resulted in large part from
factors completely unrelated to the
underlying story, “It Had To Be Murder.” It
would cause a great injustice for the owners
of the film if the court enjoined them from
further exhibition of the movie. . . . We
also note that an injunction could cause
public injury by denying the public the
opportunity to view a classic film for many
years to come.
Id. at 1478-79.
The Abend court observed that “courts might . . . award
damages or a continuing royalty instead of an injunction in such
7
special circumstances”5 and that “Abend can be compensated
adequately for the infringement by monetary compensation.”
Id. at 1479.
This Court found circumstances existing analogous to those
presented in Abend.
The ability of the Court to provide
reasonable compensation to Bouchat for the Defendants’
infringing use of his copyright-protected work was a
determinative factor in its decision to deny injunctive relief.
This Court will not permit Defendants to take Bouchat’s
intellectual property without recognition of his authorship and
without any compensation whatsoever.
While the amount of
compensation reasonably due Bouchat may be small, it should not
be zero.
The United States Court of Appeals for the Fourth
Circuit has rejected Defendants’ contention that the uses at
issue are non-infringing fair uses.
If, as Defendants contend,
this Court could not provide Bouchat any compensation
whatsoever, this Court would grant Bouchat the injunctive relief
sought.
The Court will, therefore, determine the amount of
compensation that must be paid Bouchat for any repetition of the
uses at issue of the Flying B Logo.
5
Citing 3 M. Nimmer, Nimmer on Copyright § 14.06[B] at 14-56.2
(1988)).
8
B.
Reasonable Compensation
The Court finds that the reasonable compensation due
Bouchat for repetitions of the infringements at issue would be a
reasonable royalty for the uses of his copyright-protected work.
It may well be true, as contended by Defendants, that the
Shield Drawing has no fair market value separate and apart from
the Flying B Logo, which derives its value entirely from its
association with the Ravens.
Moreover, Bouchat has never sold,
licensed or attempted to sell or license, the Shield Drawing.6
Nevertheless, the Flying B Logo is an improvement of the Shield
Drawing and is, in and of itself, an infringement of Bouchat’s
copyright.
Hence, the market for the Flying B Logo includes, in
effect, the market for Bouchat’s copyright-protected work in the
Shield Drawing.
While Defendants may doggedly refuse to recognize it, the
fact remains that any future infringement of Bouchat’s copyright
will constitute taking Bouchat’s property.
As stated by the
United States Court of Appeals for the Second Circuit:
6
Or any other of his drawings.
9
[A]s between leaving the victim of the
illegal taking with nothing, and charging
the illegal taker with the reasonable cost
of what he took, the latter, at least in
some circumstances, is the preferable
solution.
Davis v. The Gap, Inc., 246 F.3d 152, 166 (2d Cir. 2001).
The instant case presents a circumstance in which it is
preferable to pay the copyright owner reasonable compensation
rather than let the Defendants continue to infringe without cost
or consequence.
While, in view of the nature of the infringing
uses at issue, the amount of reasonable compensation must be
small, it will not be zero.
The Court shall determine the reasonable compensation due
Bouchat for repetitions of the infringements at issue, by
“consider[ing] all evidence relevant to a hypothetical
negotiation” and determining the fair market value of a license
for the infringing use. Gaylord v. United States, 678 F.3d 1339,
1344 (Fed. Cir. 2012).
The fair market value shall be
“calculated based on a hypothetical, arms-length negotiation
between the parties.” Id. at 1343.7
7
The Court shall “not rule
In patent infringement cases, the hypothetical negotiation
approach attempts to ascertain the royalty upon which the
parties would have agreed had they successfully negotiated an
agreement just before infringement began. See Georgia-Pacific
Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1120
(S.D.N.Y. 1970)(articulating a list of fifteen factors by which
a reasonable royalty may be calculated). The Federal Circuit
noted, referring to the Georgia-Pacific test, that
10
out the possibility that a one–time, paid-up license accurately
reflects the fair market value of a license” for an infringing
use.
Id. at 1345.
1.
Highlight Films
The Court finds that, in hypothetical negotiations
conducted in 2013,8 the Defendants would desire to pay a one-time
royalty rather than have the burden of determining and paying
royalties on each sale and that Bouchat would reasonably accept
a one-time payment rather than to receive annual checks of the
modest amounts that would be due him.
Moreover, the Court finds
that the Defendants would offer a one-time payment that would
exceed the amount that would be due on the basis of assumptions
so favorable to Bouchat as to exceed the maximum amount he could
rationally hope to recover in litigation, and Defendants would
pay such a “premium” based on the ability to avoid a “gap” in
their collection of highlight films for sale.
Thus, the Court determines the hypothetically agreed
royalty on the following assumptions:
“[d]etermining a fair and reasonable royalty is often . . . a
difficult judicial chore, seeming often to involve more the
talents of a conjurer than those of a judge.” Fromson v.
Western Litho Plate & Supply Co., 853 F.2d 1568, 1574 (Fed. Cir.
1988).
8
Since this decision is issued in late December 2012, the
earliest reasonable date for a negotiation of reasonable
compensation for future use is in the year 2013.
11
That Bouchat would be receiving royalties for 85 years
from the date of the negotiations.9
That each copy of the highlight films will sell for
$50.00.10
That each year Defendants will sell one copy of a
Ravens highlight film and four copies of Ravens’
opponents’ highlight films for the 1996-98 seasons.11
That a royalty would be due at the rate of 11.3% - the
rate claimed by Bouchat – and that the royalty would
be paid on the gross proceeds without consideration of
any costs associated with the sales.12
That on each sale of a Ravens’ highlight film, the
royalty would be $5.6513 and on each sale of a Ravens’
opponent’s highlight film, the royalty would be $.71.14
9
This assumes that there will be an undiminished stream of sales
of season highlight films from the 1996-98 seasons continuing
for a century after the 1998 season and that Bouchat lives for
at least 15 years from the date of the agreement (since the
copyright lasts for 70 years after his death).
10
There is no reason to assume that, in terms of present
dollars, the price of the films will increase.
11
This assumption is substantially in excess of the actual sales
for the past seven years as reflected in the evidence.
Defendants submitted records of past orders for the highlight
films – three orders for a total of nine films were submitted
for the 1996-98 Ravens’ highlight films, and none have been
ordered since September 2008. Thirty-four opponents’ films for
the 1996-98 seasons were ordered during the same time period,
and twelve were ordered during the past four years.
12
Although, in fact, the Defendants have substantial expenses in
regard to each sale.
13
That is, 11.3% of $50.00.
14
This is based upon the assumption that each such opponent
would have played the Ravens in two (rather than one) of their
sixteen games. Thus, it is assumed that one-eighth of each such
film is devoted to the Ravens’ games. Therefore, the assumption
is that a royalty of 11.3% is due on $6.25 (one-eighth of the
$50.00 received), i.e., $.71.
12
Hence, for each of 85 years, Bouchat would be entitled
to a total royalty payment of $8.49.15
On the aforesaid assumptions, Bouchat would receive 85
annual payments of $8.49, totaling $721.65.
If reduced to
present value using a modest discount rate of 1%, the present
value of the income stream would be less than $500.00.
However,
the Court further finds that the Defendants would be willing to
pay the undiscounted amount of $721.65 to close the deal.
The
Court further finds that Bouchat, with no reasonable basis to
expect to receive any more than the offer, would accept.
Thus, the Court finds that reasonable compensation for
future infringements of Bouchat’s copyright by the sale of
season highlight films would be a one-time payment of $721.65.
2.
Memorable Moments
The evidence establishes that on one occasion, during a
game between the Ravens and the Saint Louis Rams, a video clip
of a prior game in which the Ravens team wore the Flying B Logo
was shown on the stadium scoreboard screen.
As best can be
determined from the evidence, the clip was on the stadium screen
no more than 45 seconds and may well have been substantially
15
That is $5.65 for the Ravens’ highlight films and $2.84 for
the four Ravens’ opponents’ highlight films.
13
less.16
Moreover, it appears highly unlikely that the Ravens
will again use a video clip from the 1996-98 season in a similar
manner.17
Bouchat takes the position that a royalty for a future
infringement of the type at issue should be set by reference to
the duration of the video clip and the profits derived from
ticket sales for the game.
However, the evidence of record
provides no reasonable basis for making such a determination.
Perhaps the Court could make a “ballpark” rough estimate of
$7,000,000.00 of gross receipts from ticket sales at a typical
Ravens game by assuming sales of 70,000 tickets at $100.00.
The
Court might also estimate that a typical ticket is paid for in
stadium entertainment over 200 minutes and that the
entertainment would include a 45 second video clip shown on the
scoreboard, i.e., .375% of the stadium time purchased. Even if
the Court were to assume that there should be a royalty based on
11.3% of .375% of ticket sales profits, the record does not
permit even a rough estimate of the pertinent net proceeds.18
16
The video clip in evidence is raw footage rather than the
finished product shown at the game. Therefore, it is not
possible to determine the duration of the clip that was actually
shown at the game.
17
The Court does not have before it, and is not addressing,
possible showings of video clips from the 1996-98 seasons for
special purposes, such as ones commemorating former players.
18
Indeed, if the Court were to take judicial notice of the
current NFL salary cap and assume the Ravens paid player
14
The Court does not foreclose the possibility that there
could be evidence permitting a determination of a reasonable
royalty in regard to the video clips at issue.
record does not contain any such evidence.
However, the
Moreover, the
evidence establishes a very low likelihood that there will be a
further infringement of the type at issue.19
Accordingly, in the
absence of any ability to determine an amount on a principled
basis, the Court finds it reasonable to permit future uses of
the type at issue upon the payment of $100.00 for each such use.
IV.
CONCLUSION
For the foregoing reasons, the Court decides that it shall
issue a separate Conditional Injunction Order providing that
Defendants shall not:
1.
Sell highlight films of the 1996-98 season in
which the Flying B Logo is shown unless
Defendants, prior to any such sale, shall pay
Bouchat a one-time permanent royalty of $721.65.
salaries of $120,000,000.00 for the season, on a per game basis,
these salaries alone would exceed the gross receipts from ticket
sales. Of course, the team has a myriad of expenses in addition
to player salaries, as well as income derived from other sources
that would need to be considered in making a determination of
the expenses fairly allocable to ticket receipts.
19
The Court is not here addressing the possibility that brief
excepts from video clips of 1996-98 Ravens games might be shown
on the stadium scoreboard on special occasions rather than, as
in the instant case, during the course of football games to show
prior action between the teams contemporaneously playing.
15
2.
Show on the scoreboard at Ravens home games,
video clips from a game against the same opponent
during the 1996–98 season displaying the Flying B
Logo,20 without paying Bouchat a royalty of
$100.00 for each video clip shown.
SO DECIDED, on Thursday, December 27, 2012.
/s/_____
_____
Marvin J. Garbis
United States District Judge
20
This decision does not relate to showings at Ravens games of
video clips for other purposes, including, but not limited to,
ceremonies honoring former Ravens personnel.
16
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