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Court Affirms $1.7 Million Damages in Beastie Boys v. Monster Energy

Monster Energy [1] created and distributed a promotional video, which included portions of five Beastie Boys’ [2] songs and referred to the Beastie Boys and its band members. Monster did not obtain licenses to use the Beastie Boys’ songs or use the band’s or band members’ names. The Beastie Boys filed a lawsuit for copyright infringement [3] and false endorsement. [4]

The trial court ruled in favor of both of the Beastie Boys’ claims. The jury awarded the Beastie Boys $1 million in actual damages, $1.2 million in statutory damages, and $500,000 on the false endorsement claim. [5] The jury verdict breakdown was:

  • 10 acts (5 compositions & 5 sound recordings) of copyright infringement were willful.
  • Actual Damages: $100,000 per work= $1 million.
  • Statutory Damages: $120,000 per work= $1.2 million.
  • False Endorsement: Monster used the Beastie Boys’ persona without permission, intended to deceive the market about the endorsement, and the market was confused or deceived about the endorsement. $500,000.
  • Total award: $1.7 million.

Following the jury trial, Monster filed a motion for judgment as a matter of law. [6]  The court issued its decision on the post-trial Motion for Judgment as a Matter of Law on December 4, 2014.

COPYRIGHT INFRINGEMENT CLAIM:

Before the start of trial, Monster conceded liability for copyright infringement. Therefore, the copyright claim litigation concerned the amount of damages. The parties litigated both actual damages and statutory damages. As the prevailing party on liability, the Beastie Boys could elect, at any time prior to final judgment, actual damages or statutory damages.

Both parties agreed that actual damages were what a willing buyer and seller would have agreed to as a price for a license to the Beastie Boys’ songs.   Actual damages were difficult to establish because the Beastie Boys had never licensed their works for a product advertisement, and Monster’s dissemination of the video via YouTube, Facebook, and other social media was novel and without precedence to base the price. As a result, determining actual damages was a battle of the experts, and the Beastie Boys’ expert prevailed. The real fight over damages occurred over statutory damages.

Willfulness:

The key question in determining the amount of statutory damages was whether Monster’s actions were willful. For innocent infringements, the statutory damages are $750 to $30,000 per work. If the infringement is willful, the statutory damages are up to $150,000 per work. 17 U.S.C. § 504(c)(1)-(2).

Monster attempted to overcome a charge of willfulness by asserting, inter alia, three principle defenses: (1) the contract with the disk jockey who created the videos shifted the burden of obtaining consent to him, and any infringement was due to the disk jockey’s breach of the contract; (2) Monster reasonably relied on the disk jockey’s apparent authority as an agent for the Beastie Boys; and (3) Monster reasonably relied on the disk jockey’s granting Monster permission to use the Beastie Boys’ music.

The defenses failed due to the failure of contract formation. A contract requires offer, acceptance, and consideration. None of the three elements were present. For the three defenses, Monster relied on a fleeting discussion between their representative and the disk jockey at an after event party and minuscule, ambiguous follow-up e-mails between them. Furthermore, even if the court had found the formation of a contract in the communications, there was no mention of a license to the Beastie Boys’ music.

The Second Circuit defines willfulness as engaging in infringing actions while either (1) knowing the activity is infringing, (2) choosing to be blind to infringing actions, or (3) acting with reckless disregard to others’ copyrights. [7] Courts have found willfulness where the defendant:

  • engaged in a pattern of unreasonable actions that reveal a disregard for others’ copyrights, [8]
  • had constructive knowledge, i.e. based on the circumstances a reasonable person should know, of the infringement, [9]
  • due to the high probability that his actions were infringing, should have confirmed whether they were infringing, [10] or
  • turned a blind eye to the potential infringement because he was concerned an investigation would reveal the actions were infringing. [11]

There was sufficient evidence to support the jury’s finding that Monster acted with reckless disregard for the Beastie Boys’ copyrights.   The Monster employee with responsibility for making the intellectual property decisions, including licensing, about the video was clearly unqualified. He did not have any training or experience with the complicated copyright issues involved in creating a video and distributing it publicly.

The biggest strike against Monster’s actions was its failure to implement a comprehensive music licensing system. A company the size of Monster and one dealing with intellectual property as a matter of course is without excuse for not having any policies, procedures, and systems in place to guard against copyright infringements. Monster had systems in place to protect its copyrights, but it failed to do the same to protect itself against infringing the rights of others.

Monster’s indifferent approach to licensing music and failure to implement a system of measures to prevent infringing acts was reckless and, therefore, willful infringement.

FALSE ENDORSEMENT CLAIM:

The court affirmed the trial court’s finding of false implied endorsement. The district court held that Monster’s use of the Beastie Boys music and references to the group and individual members created the impression that the Beastie Boys endorsed the Monster products. However, Monster had not obtained the Beastie Boys’ consent to use their music and persona. [12] Therefore, the video likely confused consumers about the relationship between Monster and the Beastie Boys. [13] Protecting against market confusion is the holy grail of trademark law. [14]

A false implied endorsement occurs when a defendant uses another’s trademark to suggest an association between the defendant’s product or service and the owner of the trademark. The endorsement is implied because the defendant does not explicitly state any type of association. An implied endorsement is actionable because it causes consumer confusion and harms the trademark owner’s reputation. [15]

There is not a uniform test across the federal district courts for false endorsement. In the Second Circuit, the elements of the test are: [16]

  1. Defendant made a false or misleading representation of fact;
  2. The representation regards commerce;
  3. The representation was in connection with goods or services; and
  4. The representation is likely to cause consumer confusion as to the origin, sponsorship, or approval of the goods or services.

The 2nd and 3rd elements are undisputed. Therefore, the court considered the 1st and 4th elements.

Whether Monster made a false or misleading representation of fact:

The video did make a false representation that the Beastie Boys endorsed Monster. The video is an advertisement for Monster and is filled with references to Monster. Therefore, the video is an endorsement of Monster. The endorsement is attributable to the Beastie Boys for many reasons:

  • The Beastie Boys music is as prominent as Monster visuals in the video.
  • Beastie Boys music is in 85% of the video.
  • The music is not in the background: it is loud.
  • The featured songs are some of the Beastie Boys most famous songs.
  • The video has two textual references to the Beastie Boys in Monster’s signature green and grey colors.
  • Monster’s post on YouTube and other social media included “Beastie Boys” in the description.
  • Monster’s press releases included “Beastie Boys” in the text.

Monster argues that the district court should have prevented the jury from considering the copyrighted music in the video, and the jury should have been instructed to limit its consideration to only the incidences of a visual presentation of “Beastie Boys.” [17]

Monster’s argument leans on two principles applied by courts in cases involving both copyright and trademark claims. First, when necessary, the courts construe the Lanham Act narrowly to avoid conflict with First Amendment rights to artistic expression. [18] Second, when a claim is based solely on infringing a work’s copyright, the courts hesitate to extend the Lanham Act to areas that would duplicate areas that copyright law covers. Oliveira v. Frito-Lay, Inc. [19]

Monster’s argument fails for several procedural reasons:

  • Monster waived the right to raise the issue in post-trial because it did not raise it at the district court. To preserve the issue, Monster needed to raise it prior to submitting jury instructions to the jury.
  • At trial Monster verbally hinted at the issue, but it did not raise the issue with the required level of specificity. [20]
  • At trial, Monster did not cite any case authority for its motion.
  • At trial, Monster did not cite any law or facts to support its motion.

Monster’s argument also fails on the merits. A copyright claim and a false endorsement claim are not mutually exclusive, as Monster asserts. Oliveira did not go that far. Oliveira holds that a musical composition is not ineligible for use as a trademark to identify goods or services. However, it cannot serve as a trademark for itself. [21] For example, Bob Seger’s song, Like a Rock, could be a trademark for Chevrolet, but it could not be a trademark for itself or for Bob Seger.

Applying Oliveira to the Monster case, a Beastie Boys’ signature song alone cannot be the basis of a false endorsement claim. Otherwise, someone could license the copyright to a signature song and still be subject to a trademark claim.   This would be an impediment to commercial transactions, which is what Oliveira is trying to avoid. However, in Monster, the Beastie Boys’ claim is not for a single song, but for five songs, cites to the band and a band member, plus cites to the band in social media distribution efforts by Monster.

Furthermore, in Oliveira, the defendant held a license to the copyrighted work; Monster does not hold a license to any of the Beastie Boys’ works. Therefore, considering the trademark claim along with the copyright claim does not pose any threat to reasonable commercial transactions.

Finally, to overcome the charge of making false or misleading statements, Monster asserts its use is a nominative fair use. Nominative fair use occurs when there is no substitute means of referring to a product or service except through use of the trademark, e.g. a survey of shoe brands that list Nike as one of the types of shoes. [22]

In the Second Circuit, a defendant may lawfully use a plaintiff’s trademark where doing so (1) is necessary to describe the plaintiff’s product and (2) does not imply a false affiliation or endorsement by the plaintiff of the defendant. [23] The court held that neither of these two requirements was met in Monster.

Whether the representation is likely to cause consumer confusion:

In determining the likelihood of consumer confusion, courts consider eight factors: [24]

    1. “the level of recognition that the Beastie Boys’ have among purchasers of Monster’s products”;
    2. “the similarity between the Beastie Boys’ music and names and the music and names used by Monster”;
    3. “any evidence of actual consumer confusion regarding whether the Beastie [B]oys endorsed Monster’s products”;
    4. “Monster’s intention in selecting the Beastie Boys’ music and names”;
    5. “the sophistication of Monster’s potential customers;”
    6. “the proximity of the products”;
    7. “the likelihood that the prior owner will bridge the gap”; and
    8. “the quality of the defendant’s product.

The parties agreed that only the first five factors were relevant for the Monster case. The Beastie Boys did not present evidence of actual confusion. The remaining four factors supported a finding of likely confusion.

WHETHER MONSTER’S ACTIONS WERE INTENTIONALLY DECEPTIVE

Monster challenges the jury’s finding that it intentionally acted to deceive consumers. The preceding analysis shows Monster is liable for false endorsement. Liability for false endorsement allows the plaintiff to petition for injunctive relief. For money damages, the Beastie Boys must prove “either actual consumer confusion or deception resulting from the violation or that defendant’s actions were intentionally deceptive thus giving rise to rebuttable presumption of consumer confusion.” [25]

For the copyright claim described above, the Beastie Boys only needed to prove reckless disregard. For the Beastie Boys to prevail on the false endorsement claim, the Lanham Act requires them to prove Monster used their mark with the intention of benefitting from the Beastie Boys’ “reputation and goodwill” and any confusion between the Beastie Boys’ music and Monster’s products. [26]

Even though the Beastie Boys did not present any evidence of Monster’s intentional acts of deception, they did show that an objective observer could reasonably conclude from the Beastie Boys songs and names in the video that the Beastie Boys endorsed the Monster products. An actor is presumed to have intended the natural consequences of his deeds. [27]

Intentional deception can be proved with direct or circumstantial evidence. [28]  The Beastie Boys established two facts that provide circumstantial evidence of Monster’s intent to deceive: (1) the Monster representative who created the video knew the Beastie Boys had not endorsed Monster; and (2) Beastie Boys songs permeated the video. The circumstantial evidence established the presumption that Monster intended to deceive consumers, and Monster did not overcome the presumption.

BOALDIN LAW COMMENTS:

When creating marketing and promotional material that involves copying existing works, be sure the responsible employees have training and experience in licensing copyrighted works.

If your operation is of significant size or frequently deals in creating works from existing works, be sure to develop and implement policies and systems that ensure your operation is not acting recklessly in regards to the intellectual property rights of others. Be as sensitive to others’ rights as you are to your own.

Be careful about implied endorsements in your creations and remember the presumption of intending the natural consequences of your actions.

Contact our office, solutions@boaldinlaw.com,with any comments or questions about this post.

 

[1] http://www.monsterenergy.com

[2] http://en.wikipedia.org/wiki/Beastie_Boys

[3] 17 U.S.C. § 101 et seq.

[4] Lanham Act, 15 U.S.C. § 1051 et seq.

[5] To recover money damages under the Lanham Act, the plaintiff must prove the defendant intended to deceive consumers.

[6] Beastie Boys, et al. v. Monster Energy Co., Case No. 12-Civ. 6065 (PAE), (S.D.N.Y. December 4, 2014); Fed. R. Civ. P. 50, http://www.law.cornell.edu/rules/frcp/rule_50 .

[7] Island Software & Computer Serv., Inc. v. Microsoft Corp., 413 F.3d 257, 263 (2d Cir. 2005).

[8] Id. at 264.

[9] Fitzgerald Pub. Co. v. Baylor Pub. Co., 807 F.2d 1110, 1115 (2d Cir. 1986).

[10] Basic Books, Inc. v. Kinko’s Graphics Corp., 758 Supp. 1522, 1543 (S.D.N.Y. 1991).

[11] Fendi Adele S.R.L. v. Filene’s Basement, Inc., 968 F.2d 368, 393 (S.D.N.Y. 2010).

[12] The Lanham Act also protects “a particular sound, the title of an artistic work such as a film or song, an entertainer’s distinctive voice or features, and a celebrity’s persona.”   EMI Catalogue P’ship v. Hill, Holiday, Connors Cosmolpulis, Inc., 228 F.3d 56, 62-63 (2d Cir. 2000). Celebrity. A famous or well-known person. Persona. A person’s perceived or evident personality, as that of a well-known official, actor, or celebrity; personal image; public role.

[13] A Lanham Act injury occurs “where the plaintiff’s voices, uniforms, likenesses, published words, or names were used in such a way as to deceive the public into believing that they endorsed, sponsored, or approved of defendant’s product.” Advanced Res. Int’l, Inc. v. Tri-Star Petroleum Co., 4 F.3d 327, 334 (4th Cir. 1993).

[14] Lanham Act Sec. 43(a) prohibits. “use in commerce [of] any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person.” 15 U.S.C. § 1125(a).

[15] Dallas Cowboy Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 205 (2d Cir. 1979).

[16] Burck v. Mars, Inc., 571 F.Supp. 2d 446, 455 (S.D.N.Y. 2008).

[17] Oliveira v. Frito-Lay, Inc, 251 F.3d 56, 62-62 (2d Cir. 2001).

[18] Rogers v. Grimaldi, 875 F.2d 994, 998 (2d Cir. 1989).

[19] Oliveira v. Frito-Lay, Inc., 251 F.3d 56, 63 (2d Cir. 2001).

[20] Fed. R. Civ. P. 50(a)(2); Lore v. City of Syracuse, 670 F.3d 127, 152 (2d Cir. 2012). At trial, Monster’s council stated, “[H]ere the music is subsumed by the copyright law. The music is being licensed, it’s Beastie Boys’ music. They’re singing it, they’re licensing it and that is protected by copyright.” The court can reach the waived issue if ignoring it “would result in manifest injustice” or if it reflects a “purely legal error.” Fabri v. United Techs. Int’l, Inc., 387 F.3d 109, 119 (2d Cir. 2004). (Monster did not raise these exceptions, and the exceptions do not apply.)

[21] Oliveira v. Frito-Lay, Inc., 251 F.3d 56, 61-62. (2d Cir. 2001).

[22] EMI Catalogue P’ship v. Hill, Holiday, Connors Cosmolpulis, Inc., 228 F.3d 56, 65 (2d Cir. 2000). “Where a mark incorporates a term that is the only reasonably available means of describing a characteristic of another’s goods, the other’s use of that term in a descriptive sense is usually protected by the fair use doctrine.”

[23] Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 102-03 (2d Cir. 2010).

[24] Polaroid Corp. v. Polaroid Elecs. Corp., 287 F.2d 492 (2d Cir. 1961); Kelly-Brown v. Winfrey, 717 F.3d 295, 307 (2d Cir. 2013).

[25] George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1537 (2d Cir. 1992).

[26] Borghese Trademarks, Inc. v. Borghese, No. 10 Civ. 5552 (JPO) (AJP) 2013 WL 143807, at *11 (S.D.N.Y. Jan. 14, 2013). The plaintiff’s burden of proof is less if the defendant’s actions are egregious. Res. Developers, Inc. v. Statue of Liberty-Ellis Island Found., Inc., 926 F.2d 134, 140 (2d Cir. 1991).

[27] Fort Wayne Books, Inc. v. Indiana, 489 U.S. 46, 84 n.27 (1989).

[28] La Torres v. Walker, 216 F.Supp. 2d 157, 168 (S.D.N.Y. 2000).

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