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WebReference.com - Chapter 1 from The GigaLaw Guide to Internet Law. From Random House (2/2).

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Chapter 1: Case Study: Playboy v. Sanfilippo

Fed up with Sanfilippo's continued defiance of Playboy's legal demands, Playboy filed a federal lawsuit in April 1997. Playboy alleged that Sanfilippo's website contained twenty-seven files of its images, for a total of 7,475 pictures! Playboy sought and obtained from the court a temporary restraining order and an order of seizure; within two weeks, Playboy and Sanfilippo agreed to a preliminary injunction -- a court requirement that prevented Sanfilippo from using the images until the lawsuit was resolved. Playboy then filed a motion with the court asking for a "summary judgment," a court order that there are no genuine issues of material fact to be decided in a lawsuit and that one party is entitled to judgment as a matter of law. In other words, a court will grant a summary judgment motion only in an obviously lopsided case.

To prevail on a claim for copyright infringement, the court in the Sanfilippo case noted that a plaintiff must prove two things: (1) that it owns a valid copyright, and (2) that the defendant violated one of the copyright owner's "exclusive rights" listed in the U.S. Copyright Act. As to the first requirement, the court found that there was no factual dispute that Playboy owned the copyright rights in the images on Sanfilippo's website, because even he admitted as much. As to the second requirement, the court said Sanfilippo admitted copying sixteen files directly from a third-party source onto his hard drive without Playboy's permission and that the additional eleven files were uploaded to his hard drive by someone else with Sanfilippo's authorization. Because copying is clearly one of the exclusive rights listed in the U.S. Copyright Act (they don't call it copyright law for nothing!), the court quickly concluded that Playboy was entitled to summary judgment for the 7,475 images.

The court then turned to the issue of damages-that is, how much money Sanfilippo should be ordered to pay Playboy. Damages are an interesting concept in copyright law and, depending upon the facts, can serve a number of purposes: to take away any profit a defendant may have made by committing copyright infringement, to compensate a plaintiff for money he lost as a result of having his property infringed, or to punish a defendant for having broken the law. According to one provision of the U.S. Copyright Act, under certain circumstances a plaintiff is entitled to "statutory damages" for each act of infringement in an amount from $500 to $20,000, "as the court considers just." And in cases where the defendant's conduct was "willful," that is, where he acted with knowledge that his conduct constituted copyright infringement, the court may "in its discretion" increase the damages amount to as much as $100,000 per infringement. (These figures, which applied at the time of the court's opinion in 1998, since have been increased, as noted in Chapter 2.)

Playboy argued that, with respect to nine of the twenty-seven files containing its images on Sanfilippo's site, Sanfilippo's copyright infringement was willful (and Playboy was therefore entitled to the higher statutory damages) because, among other things, Sanfilippo allegedly admitted in a deposition that he knew the copying and sale of Playboy's photos amounted to copyright infringement. The court agreed.

Playboy requested that the court enter an award in the staggering amount of $285,420,000! This figure was based on 1,699 images at $100,000 each (the maximum amount for "willful" copyright infringement) and 5,776 images at $20,000 each (the maximum amount for nonwillful statutory damages). Ultimately, the court found that an award of only $500 per image was "sufficient to adequately compensate [Playboy] and deter any future infringement by [Sanfilippo]" -- but that still totaled $3,737,500.

The lessons from this case should be clear:

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Excerpted with permission from The GigaLaw Guide to Internet Law
copyright 2002 Douglas M. Isenberg.

Created: October 28, 2002
Revised: October 28, 2002

URL: http://webreference.com/internet/gigalaw/chap1/2.html