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Eleventh Circuit: One-satisfaction rule applies to copyright infringement awards

February 28, 2008
Post by Blog Staff

In a decision this week, the Eleventh Circuit reversed the decision of a district court, holding the "one-satisfaction rule" does apply to infringement claims under the Copyright Act.This appeal arose out of a jury award to copyright plaintiff of almost $1.6 million against two defendants who infringed the plaintiff's rights in its used boat price guide. Pursuant to the one-satisfaction rule, the two defendants moved the district court to reduce the final judgment against them by the amounts the plaintiff obtained from co-defendants that settled before trial. The district court declined.The Eleventh Circuit held that the one-satisfaction rule, drawn from Rule 60(b)(5), is an appropriate rule to seek credit for settlement amounts obtained against joint tortfeasors. As a result, the court vacated and remanded the matter to the district court to reduce the award by the amount the plaintiff had already received from the settling codefendants.More detail of BUC Int'l Corp. v. Int'l Yacht Council Ltd. after the jump.BUC International brought suit against six defendants: MLS Solutions, the International Yacht Council (IYC), William Pazos, the Florida Yacht Brokers Association ("FYBA"), Bradford Yacht Sales, Inc., and Barbara Tierney, claiming that the six defendants had directly, vicariously, and/or contributorily infringed upon its copyright in the selection, order, and arrangement of information contained in BUC's Used Boat Price Guide. Several weeks before trial, BUC entered into a confidential settlement agreement with Bradford. This agreement, dated February 25, 2004, required Bradford to pay $290,000 in exchange for dismissal with prejudice from the matter. Additionally, BUC entered a confidential settlement agreement with FYBA and Tierney. This agreement, dated March 11, 2004, required FYBA and Tierney to pay $500,000 in exchange for dismissal with prejudice of the lawsuit filed against them. BUC and the settling defendants filed their notices of dismissal on April 12, 2004, and May 7, 2004. The district court dismissed the settling defendants on May 10, 2004.BUC proceeded to trial against MLS, IYC, and Pazos on its copyright claims where the jury found, on April 7, 2004, MLS and IYC liable for BUC's actual damages of $1,598,278, or alternatively, its statutory damages of $1,098,000. MLS and IYC elected to recover actual damages and the district court entered final judgment. MLS and IYC then filed their Rule 60(b) motions for relief from judgment on November 8, 2004 and December 1, 2004, respectively. The district court denied both motions on September 30, 2005, holding that the defendants were really seeking a right of "contribution" which would only exist under the Copyright Act if either Congress created such a right, expressly or implicitly, or the courts created such a right as a matter of federal common law. On appeal, the Eleventh Circuit considered two issues: 1) whether MLS and IYC filed their Rule 60(b) motions within a reasonable time; and 2) whether the one-satisfaction rule applies to infringement claims. As to the first issue, the Court held that the MLS' and ITC's delay was not unreasonable in light of the difficulty that MLS and IYC encountered in attempting to discover the terms of the confidential settlement agreements. The parties to the agreements actively resisted disclosing the amounts that had been paid in settlement of the claims, resulting in a delay of several months before MLS and IYC could reasonably have filed for relief.As to the second issue in evaluating the applicability of Rule 60(b) to the instant matter, the court held the one-satisfaction rule applied to copyright infringement damages. The rule has its roots in the principles of tort law, and generally limits a plaintiff to only one satisfaction for a single injury, such that amounts received in settlement from an alleged tortfeasors are credited against judgments for the same injury against the non-settling tortfeasors. The court found it was appropriate to apply the rule to this case. In its reasoning, the Eleventh Circuit, applying Northwest Airlines, Inc. v. Transportation Workers, differentiated between a right of contribution, which allows a defendant to demand that another who is jointly responsible for a third party's injury supply part of what is required to compensate the third party, and the one-satisfaction rule, which operates to prevent double recovery, or the overcompensation of a plaintiff for a single injury. Finding that Northwest Airlines did not limit the court's ability to apply the one-satisfaction rule to federal claims, it held that the rule does apply to infringement actions under the Copyright Act. Copyright infringement is in the nature of a tort, for which all who participate in the infringement are jointly and severally liable and, under the principles of tort law, a plaintiff is entitled to only one recovery for a wrong. Accordingly, the court held the one-satisfaction rule applied to this case, and remanded with directions to reduce the judgment entered by the amount already paid by the settling defendants.To read the full decision in BUC Int'l Corp. v. Int'l Yacht Council Ltd., click here.


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