Daubert Motions in Copyright and Trademark Infringement Cases
D’Pergo Custom Guitars, Inc. v. Sweetwater Sound, Inc.
U.S District Court, D. New Hampshire, Case No. 17-cv-747
Motions Decided January 6, 2020
D’Pergo Custom Guitars, Inc. (“Plaintiff”), a manufacturer and retailer of custom guitars, brought federal copyright and trademark infringement claims against Sweetwater Sound, Inc. (“Defendant”), a retailer of musical instruments, including guitars, sold exclusively through its website based on Defendant copying a photograph (the “Photo”) from Plaintiff’s website showcasing “a number of [Plaintiff’s] unique guitar necks and headstock” and publishing that Photo on its website – specifically, in its “Electronic Buying Guide” (the “Buying Guide”) in the section titled “Guitar necks explained”. Subsequent to the alleged infringing conduct, Plaintiff trademarked its headstock design depicted in the Photo.
Under the Copyright Act, a plaintiff who establishes the elements of a copyright infringement claim may recover “any profits of the infringer that are attributable to the infringement”. 17 U.S.C. § 504. In addition to recovering Defendant’s profits attributable to infringing conduct, Plaintiff may also recover its actual damages under the Copyright Act, which consists “of all income and profits [Plaintiff] lost as a consequence of the infringement.” Bruce v. Weekly World News, Inc., 310 F.3d 25, 28 (1st Cir. 2002). Although Plaintiff’s actual damages may also include injury to the market value of the copyrighted work, Plaintiff did not claim any such damages in this case. Further, in some cases, the amount of a hypothetical licensing fee is a permissible basis for determining the amount of a copyright owner’s actual damages. Real View, LLC. v. 2020 Techs., Inc., 811 F. Supp. 2d 553, 556 (D. Mass. 2011).
After expert reports were issued and depositions conducted, Defendant filed a motion to exclude the opinions of Plaintiff’s damages experts – one of whom offered an opinion on Defendant’s profits attributable to the infringing conduct and the other on Plaintiff’s actual damages based on a hypothetical licensing fee for the Photo – and Plaintiff moved to exclude the opinion of Defendant’s liability expert, who claimed to be an expert in the “guitar industry in general” and offered opinions that: (i) the Photo’s appearance in the Buying Guide had no negative effect on Plaintiff’s reputation; (ii) Plaintiff’s headstock looked generic; (iii) Plaintiff has had no impact on the musical instrument industry; (iv) the Photo has no value or potential value in selling musical instruments; (v) he has never heard of a Photo being paid for in the guitar industry in the way in which Plaintiff seeks payment; and (vi) when Photos are used in the guitar industry, the photographer is typically paid a flat fee, not a fee for each use of the Photo.
Before a factfinder may consider expert testimony over an adverse party’s objection, the trial judge, serving as “gatekeeper,” must determine whether the expert’s testimony satisfies the foundational requirements of Federal Rule of Evidence 702, i.e., whether: “(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.” Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579, 597 (1993).
i. Defendant’s Profits Attributable to the Copyright Infringement
To establish an infringer’s profits attributable to the infringing conduct, the copyright owner must only present proof of the infringer’s gross revenues attributable to the infringement. The infringer is required to establish his or her expenses and profits attributable to factors other than the copyrighted work. 17 U.S.C. § 504. Plaintiff’s expert opined that Defendant received approximately $6.6 million in gross revenues reasonably related to its use of the Photo, which represented revenues from the sale of electric guitars to customers who viewed the Buying Guide during the relevant time period.
Defendant challenged this methodology on the basis that it was improper to attribute to the infringement the revenues of all electric guitar sales by customers who viewed the Buying Guide. In addition, Defendant asserted that the expert failed to consider numerous relevant factors that affected electric guitars sales during the relevant time period, including whether visitors to the Buying Guide actually saw the Photo, the size or placement of the Photo within the Buying Guide, the images of guitars on the Buying Guide that would have influenced customers’ purchasing decisions, that Defendant did not sell guitars manufactured by Plaintiff, and the relationship between Buying Guide visitors and customers’ decisions to purchase an electric guitar.
Quoting Daubert, the court held that Defendant’s challenges were insufficient to warrant exclusion of the expert’s opinion, and that “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” 509 U.S. at 596.
ii. Plaintiff’s Actual Damages Resulting from the Copyright Infringement
To determine Plaintiff’s actual damages resulting from the infringing conduct, Plaintiff’s expert offered an opinion as to a hypothetical licensing fee that Plaintiff could have obtained to use the Photo. Defendant argues that Plaintiff’s expert’s testimony should be excluded because: (i) he used subjective, rather than objective, standards to calculate the “fair market value” of a reasonable licensing fee; (ii) his use of multipliers was punitive, and, as such, improper; and (iii) he used inapposite comparators to calculate a “base” licensing fee. While the court recognized Defendant’s challenges to Plaintiff’s expert’s opinion may have merit, and many were addressed in Defendant’s expert’s rebuttal report, those challenges are best left for cross-examination and do not require exclusion of any part of Plaintiff’s expert’s opinion.
iii. Plaintiff’s Damages Resulting from the Trademark Infringement
Plaintiff is entitled to recovery of actual damages relating to profits lost from sales that were diverted away from Plaintiff. Based on affidavits submitted by two of Plaintiff’s customers who state they did not purchase Plaintiff’s guitars for a period of time because they saw the Photo on Defendant’s website which negatively impacted their opinions of Plaintiff, Plaintiff’s expert determined that Plaintiff lost sales totaled $128,050. However, Plaintiff’s expert provided no opinion as to lost profits, stating instead that “I am advised that [Plaintiff] will provide a suitable witness [at trial] to substantiate costs”. Because Plaintiff’s expert merely paraphrased affidavits submitted by Plaintiff’s customers and offered no independent analysis or opinion, the court granted Defendant’s motion to exclude the expert’s testimony on trademark infringement damages because it would not “help the trier of fact to understand the evidence or to determine a fact in issue”.
iv. Defendant’s Expert’s Opinion on Liability
Plaintiff moved to exclude the opinion of Defendant’s liability expert, who claimed to be an expert in the “guitar industry in general” and offered opinions that: (i) the Photo’s appearance in the Buying Guide had no negative effect on Plaintiff’s reputation; (ii) Plaintiff’s headstock looked generic; (iii) Plaintiff has had no impact on the musical instrument industry; (iv) the Photo has no value or potential value in selling musical instruments; (v) he has never heard of a Photo being paid for in the guitar industry in the way in which Plaintiff seeks payment; and (vi) when Photos are used in the guitar industry, the photographer is typically paid a flat fee, not a fee for each use of the Photo. Plaintiff sought to exclude Defendant’s expert’s opinion on the grounds that “[he] is not an expert with respect to the opinions he offers, his opinions are not relevant, his opinions are mere speculation and unsupported conclusions, and his opinions do not help the trier of fact to understand the evidence or to determine a fact in issue.”
The court agreed that several of Defendant’s liability expert’s opinions were irrelevant to the issues in the case, including the effect of the use of the Photo on Plaintiff’s reputation, that Plaintiff’s trademarked headstock design looked “generic,” and Plaintiff’s purported impact on the musical instrument industry. Because they have no bearing on any of Plaintiff’s claims, those opinions were excluded by the court.
However, the court held that the remaining opinions of Defendant’s liability expert were relevant to Plaintiff’s claims for damages, including whether using a photograph, such as the Photo, is helpful in selling musical instruments, and the types of fees that are typically paid for photographs to sell musical instruments. The court held that Defendant’s liability expert’s knowledge as the managing partner of a large manufacturer of electric guitars whose company advertises guitars in various music publications and on its website will help the trier of fact understand the evidence and determine a fact in issue. However, because he has not authored any publications or been qualified as an expert in the past, the court held that he is unqualified to offer opinions about the general practices in the guitar industry to the extent they are not based on his personal knowledge.
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