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Under a Foot Plant, Co. v. Exterior Design, Inc.

United States District Court, D. Maryland

August 18, 2017

UNDER A FOOT PLANT, CO., Plaintiff,
v.
EXTERIOR DESIGN, INC., Defendant.

          MEMORANDUM AND ORDER

          Beth P. Gesner, United States Magistrate Judge

         Following a four-day jury trial in May 2017, defendant Exterior Design, Inc. moved this court for judgment as a matter of law against plaintiff Under A Foot Plant, Co., arguing that plaintiff's damages expert presented unreliable and legally erroneous testimony, and that plaintiff had not adduced sufficient evidence that defendant infringed plaintiff's copyrights in its registered brochure and website. Currently pending before the court is: (1) Defendant's Renewed Motion for Judgment as a Matter of Law, or Alternatively, for a New Trial (“Defendant's Motion”) (ECF No. 135); (2) Plaintiff's Opposition to Defendant's Motion (“Plaintiff's Opposition”) (ECF No. 142); and (3) Defendant's Reply in Support of Its Motion (“Defendant's Reply”) (ECF No. 146).[1] The issues are fully briefed, and no hearing is necessary. Loc. R. 105.6. For the reasons stated below, Defendant's Motion (ECF No. 135) is DENIED.

         I. BACKGROUND

         The facts of this case are set forth in Under A Foot Plant, Co. v. Exterior Design, Inc., No. BPG-15-871, 2016 WL 4555021, at *1-2 (D. Md. Sept. 1, 2016) (ECF No. 65). In brief, plaintiff alleged that defendant copied plaintiff's photographic plant images from plaintiff's brochure and website, and used those images in its own marketing materials in violation of plaintiff's copyrights. (ECF No. 65 at 4.) On summary judgment, this court found that plaintiff owned a valid copyright in twenty-one of the twenty-four images alleged to have been infringed, and that defendant infringed twelve of the twenty-one images in which the court found that plaintiff owned a valid copyright. (Id. at 16.) Accordingly, the jury was asked to determine whether plaintiff owned valid copyrights and whether defendant infringed those copyrights in the remaining images for which the court did not make a determination. (See Tr. Vol. 4, ECF No. 122 at 15-16.) In addition, and of particular importance here, the jury was asked to determine the amount of actual and statutory damages to award plaintiff for defendant's infringements. (See id. at 16, 22-25.) On May 11, 2017, the jury returned a verdict awarding plaintiff $900, 000 in actual damages and $300, 000 in combined statutory damages[2] for defendant's infringement of all twenty-three[3] of plaintiff's copyrighted images. (ECF No. 111.) Plaintiff subsequently elected actual damages pursuant to 17 U.S.C. § 504(c)(1).[4] (ECF No. 113.)

         Some discussion of the procedural machinations of this case in the months leading up to trial is relevant to the instant motion. On November 1, 2016, this court issued a scheduling order setting submission deadlines for motions in limine and the proposed pretrial order, and scheduling dates for the pretrial conference and jury trial. (ECF No. 70.) The court's order stated, in bold, that “all objections to evidence, other than objections based on relevance or prejudice/confusion/waste of time, are waived if not raised by the parties in their pretrial order.” (Id. at 4.) Defendant initially failed to submit its pretrial materials to plaintiff in time to meet the deadline for joint submission, and the court extended the deadline by two weeks. (ECF No. 77.) Once submitted, it was apparent that the parties were at a significant impasse regarding the admissibility of exhibits, and that, in general, the parties had proposed an unwieldy number of exhibits which the court observed would not be conducive to an orderly presentation of issues to the jury. Accordingly, the court postponed the pretrial conference for one week to allow counsel to further confer with an eye towards reducing and streamlining the number of proposed exhibits, and fully addressing substantive evidentiary objections prior to trial. (See ECF No. 86.)

         The bulk of the pretrial conference concerned plaintiff's challenges to defendant's purported experts;[5] defendant did not, at this time or prior to the conference, file a motion in limine or otherwise object to the qualifications of plaintiff's damages expert, Professor Jeffrey Sedlik, or the reliability of his expert report. (See ECF No. 89; Final Pretrial Order, ECF No. 96.) Nor did defendant file a motion in limine or otherwise raise any “best evidence” objections to plaintiff's exhibits under Federal Rules of Evidence 1002 and 1005.[6] At the court's instruction, the parties subsequently met and conferred to narrow the scope of exhibits to be offered at trial, and to resolve any remaining disputes.[7] (See ECF No. 89.) The resulting joint status report filed on May 3, 2017 indicated, for the first time, that defendant intended to raise “best evidence” objections to no less than forty-five of plaintiff's exhibits. (See ECF No. 95 at 2.)

         Beginning on May 8, 2017, this court conducted a four-day jury trial. On the first day of trial, and well into the direct testimony of plaintiff's first witness, defendant objected to the introduction of copies of the two registered works-plaintiff's 2005 brochure and website (collectively, the “2005 Works”)[8]-on the grounds that Rules 1002 and 1005 required certified deposits from the U.S. Copyright Office. (Tr. Vol. 1, ECF No. 119 at 73-76, 80-84.) In denying defendant's objections, the court specifically noted defendant's failure to adequately raise them in the pretrial order, and that all objections other than relevance were waived at that time. (Id. at 85-86.) Alternatively, the court found that, given the belated nature of defendant's objections, plaintiff had exercised reasonable diligence in requesting certified copies from the Copyright Office.[9] (Id. at 86-87.)

         At the close of evidence, defendant orally moved for judgment as a matter of law on substantially the same grounds articulated in defendant's current motion, namely that: (1) Professor Sedlik's testimony was unreliable under Rule 702 and legally insufficient to sustain an award of actual damages; and (2) plaintiff had not produced any evidence of defendant's access to the registered brochure and website, thereby precluding an award of statutory damages. (See Tr. Vol. 3, ECF No. 121 at 157-230). The court initially observed that defendant's first argument was, in fact, an untimely Daubert motion presented in the form of a motion for judgment as a matter of law, and that the issues raised with respect to the reliability of Professor Sedlik's testimony would have been more appropriately and more expeditiously resolved prior to trial by way of a motion in limine.[10] (Id. at 227-28, 237.) Nevertheless, the court heard argument from both sides on the merits of defendant's motion, and denied it for the reasons stated on the record.[11] (Id. at 237-44.) After the jury returned a verdict in plaintiff's favor, defendant timely renewed its motion, which is now fully ripe for review.

         II. STANDARD OF REVIEW

         A party is entitled to judgment as a matter of law on an issue following a jury trial if “the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the [non-moving] party on that issue.” Fed.R.Civ.P. 50(a)(1). The court may then decide the issue against the non-moving party and “grant a motion for judgment as a matter of law against the [non-moving] party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue.” Fed.R.Civ.P. 50(a)(1)(B). If such motion is made before the case is submitted to the jury but not granted by the court, it is subject to renewal no later than twenty-eight days after judgment is entered. Fed.R.Civ.P. 50(b). Upon renewing the motion, the movant may also bring a motion for a new trial under Rule 59. Id.

         In order to grant a motion for judgment as a matter of law, “the district court must examine the evidence in the light most favorable to the non-moving party and determine ‘whether a reasonable trier of fact could draw only one conclusion from the evidence.'” Brown v. CSX Transp., Inc., 18 F.3d 245, 248 (4th Cir. 1994) (citation omitted). If reasonable triers of fact could reach different results, the jury's verdict must be affirmed. Rhoads v. FDIC, 286 F.Supp.2d 532, 538-39 (D. Md. 2003), aff'd 94 F. App'x 187 (4th Cir. 2004). More than a scintilla of evidence is needed in support of the non-movant's case-judgment as a matter of law should be granted only when the party opposing the motion “has failed to adduce substantial evidence in support of his claim.” DeMaine v. Bank One, Akron, N.A., 904 F.2d 219, 220 (4th Cir. 1990).

         Alternatively, a motion for a new trial should be granted if “(1) the verdict is against the clear weight of the evidence, or (2) is based upon evidence which is false, or (3) will result in a miscarriage of justice, even though there may be substantial evidence which would prevent the direction of a verdict.” McCollum v. McDaniel, 136 F.Supp.2d 472, 475 (D. Md. 2001), aff'd 32 F. App'x 49 (4th Cir. 2002) (internal quotation marks omitted) (citation omitted). In deciding a Rule 59(a) motion, the court is permitted to “weigh the evidence and consider the credibility of witnesses.” Id. A new trial should not be granted “unless it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done.” Pathways Psychosocial v. Town of Leonardtown, 223 F.Supp.2d 699, 706 (D. Md. 2002) (internal quotation marks omitted) (citation omitted).

         III. DISCUSSION

         A. Actual Damages and Professor Sedlik's Expert Testimony

         Defendant first argues that plaintiff failed to present legally sufficient evidence to support the jury's $900, 000 actual damages award.[12] (ECF No. 135 at 1.) Specifically, defendant argues that Professor Sedlik's expert damages testimony was unreliable under Rule 702[13] because it: (1) ignored plaintiff's relevant, prior licensing history; (2) relied on non-comparable benchmark photographs to arrive at a base license fee; (3) failed to consider the “willing buyer” portion of the lost licensing fee standard; (4) failed to individually value each photograph; and (5) lacked a relevant and reliable method for arriving at the five-to-ten times competitive use multiplier. (Id. at 6-7.) At trial, the court concluded that defendant's arguments were properly directed to the weight of Professor Sedlik's testimony, not its reliability under Rule 702. (ECF No. 121 at 238.) Upon review of the parties' submissions, the court concludes that defendant's arguments must be rejected.

         The crux of defendant's position is that Professor Sedlik misapplied the standard for evaluating actual damages based on lost licensing fees, as articulated in On Davis v. The Gap, Inc., 246 F.3d 152 (2nd Cir. 2001), and adopted by the Fourth Circuit in Dash v. Mayweather, 731 F.3d 303 (4th Cir. 2013). Both cases, however, are factually and procedurally distinguishable, [14] and do not stand for the propositions for which defendant relies on them. For example, defendant argues that, under On Davis and Dash, prior licensing history is a “required benchmark” unless the plaintiff offers proof to justify the imposition of higher licensing fees. (ECF No. 135-1 at 11.) Although this is a colorable reading of the Fourth Circuit's view, neither case actually states that a plaintiff must rely on evidence of past licensing when it is available, or, more importantly, that the failure to do so renders an expert's opinion unreliable under Rule 702. Moreover, notwithstanding defendant's reliance on Second Circuit law, plaintiff did offer evidence to justify the imposition of a higher fee. Plaintiff's prior licensing history involved authorized sellers of its plant program, and, as Professor Sedlik explained, those fees would have accounted for the promotion and sale of plaintiff's own products through the program. (See Tr. Vol. 2, ECF No. 120 at 126-27, 131.) In this regard, Professor Sedlik's explanation is consistent with both On Davis and Dash, and the court concludes that a reasonable jury could credit his testimony.

         In its Reply, defendant contends that plaintiff misrepresents the nature of its prior licensing agreements, which contained no royalty provisions and imposed only a modest purchase requirement. (ECF No. 146 at 8.) Defendant misses the point-whether or not the terms of plaintiff's prior agreements contemplated specific royalty payments or purchase requirements does not change the fundamental difference in bargaining positions between defendant and plaintiff's prior licensees. This difference-between a competitor and an authorized seller of plaintiff's own ...


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