Virginia Lawyers Weekly VA Lawyers Weekly
Where owners of electronic skill-based games alleged that defendants purchased and used illicit versions of their games, the owners’ motion for default judgment on their Copyright Act claims was granted. But the owners were denied willful statutory damages because there was no showing that the infringement was willful.
Background
This case arises out of defendants’ use and public display of electronic skill-based games produced by plaintiffs Grover Gaming Inc. and Banilla Games Inc. and using plaintiffs’ computer file and associated audiovisual effects. On March 8, 2022, plaintiffs filed a verified complaint, asserting that defendants violated the Copyright Act in the use, distribution, public display and/or sale of certain copyrighted work without plaintiffs’ consent. Following the entry of default, plaintiffs filed a motion for default judgment.
Default judgment
Plaintiffs have satisfied the procedural requirements for entry of default judgment, as the properly served defendants have completely failed to plead or otherwise defend the case, including by failing to respond to the motion. The court must next consider whether the allegations in the complaint support the relief that plaintiffs seek.
Plaintiffs have alleged that they own the copyrighted work, and they attached the Certificate of Registration from the United States Copyright Office. Additionally, plaintiffs allege that defendants had in their possession unauthorized, pirated or hacked versions of the copyrighted work and allowed their customers to use the illicit games. Accordingly the court grants plaintiffs’ motion for default judgment.
Damages
Plaintiffs have elected to pursue statutory damages instead of actual damages, urging the court to award it damages for two willful infringements, totaling $300,000 in statutory damages. A review of the factual allegations does not convince that court that defendants acted willfully in their infringement.
First, defendants’ infringement does not stem from their own copying of copyrighted work, but instead from purchasing a product that a third party had copied. Other than the fact that defendants paid less than market value, plaintiffs do not allege how defendants would have known that the illicit games infringed on plaintiffs’ copyright.
The court must determine the amount of damages between $750 to $30,000 per infringement that it will award. Plaintiffs’ allegations largely stem from the fact that defendants bought two counterfeited games and allowed their customers to use the illicit games at their store, thereby cutting into plaintiffs’ expected profits from the sale of two genuine games.
The court does not believe that these allegations warrant statutory damages near the top of the range for the purchase and use of two counterfeit machines that would normally cost under $10,000. However, due to the intended deterrent effect of statutory damages, the court will award plaintiffs $10,000 for each illicit game, for a total of $20,000.
Injunctive relief
Plaintiffs also seek an order enjoining defendants from further infringing on their copyrights and ordering the impoundment and destruction of the illicit games. The court finds that the allegations support an injunction.
With respect to irreparable injury, the Fourth Circuit has noted that “[i]rreparable injury often derives from the nature of copyright violations, which deprive the copyright holder of intangible exclusive rights.” Moving to the adequate remedy at law prong, the Fourth Circuit noted that damages at law would not remedy the continuing existence of the infringement.
Having not responded at all, defendants have offered no hardships that the injunction would create for them. Indeed, the court cannot discern any, beyond the requirement that defendants follow the law. Finally the court cannot discern any harm to the public in permanently enjoining defendants from violating copyright laws. Therefore, the court will enjoin defendants from further using the illicit games. However, the court finds that the other injunctive relief requested by plaintiffs – impoundment and destruction – is superfluous in light of the court’s injunction.
Fees and costs
The Copyright Act provides that a “court in its discretion may allow the recovery of full costs” and “may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” Here, it seems that vindicating their copyright rights motivated plaintiffs to bring this suit. Plaintiffs have not taken any objectively unreasonable or frivolous positions, especially in light of defendant’s failure to respond to the suit. The court finds that these factors warrant an award of attorney’s fees in this case.
Plaintiffs have submitted an affidavit in support of their claim for reasonable attorney’s fees and costs in the amount $14,112.80. The court has reviewed the affidavit and itemized records and finds the requested fees and costs reasonable.
Plaintiff’s motion for default judgment granted in part, denied in part.
Banilla Games Inc. v. AKS Virginia LLC, Case No. 3:22-cv-131, Nov. 7, 2022. EDVA at Richmond (Novak). VLW 022-3-503. 11 pp.
