United States Court of Appeals
For the First Circuit
No. 00-2290
JUAN R. ORTIZ-GONZALEZ,
Plaintiff, Appellee,
v.
FONOVISA,
Defendant, Appellant.
No. 01-1004
JUAN R. ORTIZ-GONZALEZ,
Plaintiff, Appellee,
v.
DISTRIBUIDORA NACIONAL DE DISCOS, INC.,
Defendant, Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Pérez-Giménez, U.S. District Judge]
Before
Boudin, Chief Judge,
Kravitch,* Senior Circuit Judge,
* Of the Eleventh Circuit, sitting by designation.
and Torruella, Circuit Judge.
Irene M. Vera, with whom Alfredo Castellanos was on brief
for appellant.
Rafael E. Silva-Almeyda, with whom Jésus R. Rabell-Méndez
was on brief for appellee.
January 17, 2002
KRAVITCH, Senior Circuit Judge. In these consolidated
cases involving copyright infringement, defendant-appellant
Distribuidora Nacional de Discos, Inc., (“Distribuidora”), a
distributor, appeals from the district court’s judgment awarding
statutory damages, raising the following issues: whether a
distributor can be liable for copyright infringement where
plaintiff has not established that the producer was guilty of
copyright infringement, and whether it violated due process for
a defaulting party to not be notified of a trial date or to not
have a damages hearing. Defendant-appellant Fonovisa, the
producer, appeals the district court’s denial of its motion
requesting attorney’s fees.
I. BACKGROUND
Juan R. Ortiz-Gonzalez allegedly authored and composed
two songs, entitled “Si Así Tu Eres” and “Soy La Peregrina.”
These songs were included, without his permission, in an album
entitled “De Vuelta Al Sabor” that was produced by Fonovisa, a
Latin music record label. Fonovisa licensed the right of
distribution of the album to Distribuidora, which then licensed
the right to Distribuidora Aponte, Inc. (“Aponte”).* After the
album was distributed, Ortiz-Gonzalez filed a cause of action
against Fonovisa, Distribuidora, and Aponte, alleging copyright
*Aponte is not a party in this appeal.
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infringement under the Copyright Act, 17 U.S.C. § 101 et seq.
(2001), and violations of the Lanham Act, 15 U.S.C. § 1051 et
seq. (2001).
Fonovisa answered the complaint, but Distribuidora and
Aponte never responded. Ortiz-Gonzalez proceeded to trial;
Distribuidora and Aponte were not notified of the trial date.
At trial, Ortiz-Gonzalez presented his evidence, then
voluntarily dismissed the case against Fonovisa. Instead,
Ortiz-Gonzalez pursued his cause of action against Distribuidora
and Aponte, both of whom were in default.** Concomitant with the
dismissal, the parties entered into an agreement that Fonovisa
would not collect any award of attorney’s fees or costs. The
court found Fonovisa’s request for attorney’s fees moot due to
the agreement.
Following the trial, Ortiz-Gonzalez filed a post-trial
memorandum on the liability of Distribuidora and Aponte and
requested an award of damages. Distribuidora first made an
appearance at this stage, filing a reply to plaintiff’s post-
trial memorandum; Aponte did not reply. Having determined that
no hearing on damages was necessary, the court awarded the
**Default was entered after the defendants failed to make
an appearance or respond to the complaint within the appropriate
time period; as to Fonovisa, the entry of default was later set
aside by the court.
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plaintiff $9,500.00 in statutory damages against Distribuidora
and $6,756.79 in actual damages against Aponte. Distribuidora
appeals from the court’s award of statutory damages. Fonovisa
appeals the district court’s denial of its motion requesting
attorney’s fees. These cases were consolidated on appeal.
II. DISCUSSION
A.
Distribuidora appeals the order of the district court
awarding Ortiz-Gonzalez statutory damages after a default
judgment for copyright infringement under 17 U.S.C. § 504
(2001). The defendant asserts it was error for the court: (1)
to find Distribuidora liable as a distributor where the
plaintiff had not established that the producer was guilty of
infringement; (2) to hold a trial and award damages against
Distribuidora where the plaintiff had not notified Distribuidora
of the trial date; and (3) to not hold a hearing on damages.
Whether a distributor can be found liable for copyright
infringement where the plaintiff has not established that the
producer is guilty of infringement is a question of law that is
reviewed de novo. Liberty Mut. Ins. Co. v. Metro. Life Ins.
Co., 260 F.3d 54, 61 (1st Cir. 2001). The issue of notice of
the trial after defaulting is also a question of law reviewed de
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novo. Id. As to a hearing on damages, the need for such a
hearing is vested with the district court and reviewed for abuse
of discretion. HMG Prop. Investors, Inc. v. Parque Indus. Rio
Canas, Inc., 847 F.2d 908, 919 (1st Cir. 1988).
1. Distributor Liability
Distribuidora contends that a distributor’s liability
for copyright infringement is derived from a producer’s
liability.*** The Copyright Act, however, states that “the owner
of a copyright under this title has the exclusive rights to do
and to authorize any of the following: . . . (3) to distribute
copies or phonorecords of the copyrighted work to the public by
sale or other transfer of ownership, or by rental, lease, or
lending.” 17 U.S.C. § 106 (2001). Section 106(3) explicitly
grants to the copyright owner the exclusive right to distribute
copies of the copyrighted work. See 2 Melville B. Nimmer &
David Nimmer, Nimmer on Copyright § 8.11[A] (2001); see also
Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d
829, 843 (11th Cir. 1990). The Copyright Act further provides
that “anyone who violates any of the exclusive rights of the
***
Distribuidora contends that Ortiz-Gonzalez must proceed
under a theory of contributory liability, and that where there
is no primary infringer there can be no secondary infringer.
Because the producer, Fonovisa, was not found to be an infringer
of Ortiz-Gonzalez’s copyright, Distribuidora argues that it
cannot face liability as a distributor. This is premised on an
inaccurate conception of the law.
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copyright owner . . . is an infringer of the copyright.” 17
U.S.C. § 501(a) (2001); Cable/Home Communication Corp., 902 F.2d
at 843 (“Public distribution of a copyrighted work is a right
reserved to the copyright owner, and usurpation of that right
constitutes infringement.”); 2 Nimmer & Nimmer, supra, §
8.11[A]. Thus, if Distribuidora distributed copies of Ortiz-
Gonzalez’s copyrighted work, the act of distribution is a direct
infringement itself, not an act of contributory or vicarious
infringement.
In his complaint, Ortiz-Gonzalez alleged that
Distribuidora distributed throughout Puerto Rico unauthorized
reproductions of his copyright protected songs. Distribuidora,
having failed to appear or respond, was in default. A
defaulting party “is taken to have conceded the truth of the
factual allegations in the complaint as establishing the grounds
for liability as to which damages will be calculated.” Franco
v. Selective Ins. Co., 184 F.3d 4, 9 n.3 (1st Cir. 1999).
Therefore, the district court was correct to have found
Distribuidora liable to Ortiz-Gonzalez for copyright
infringement.
2. Notice
Distribuidora complains that it was never notified of
the trial date in this case. Although it was a defaulting
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party, Distribuidora contends it had a due process right to be
given notice of the trial.
Federal Rule of Civil Procedure 55(b)(2)**** states that
notice is required before application to the court for entry of
a judgment by default when a party has appeared in an action.
It follows that if judgment can be entered against a defendant
without notice where the party has failed to appear,***** then due
process cannot require a higher standard for notice of the trial
date in the same situation.
Here, Distribuidora did not make an appearance until
the motion for post-trial judgment; therefore, it was not
entitled to the benefits granted in Rule 55. This does not
violate Distribuidora’s due process rights; in fact, the purpose
of Rule 55 is to protect the rights of parties like Ortiz-
Gonzalez. See H.F. Livermore Corp. v. Aktiengesellschaft
Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970)(“[T]he
diligent party must be protected lest he be faced with
****
“If the party against whom judgment by default is sought
has appeared in the action, the party . . . shall be served with
written notice of the application for judgment at least 3 days
prior to the hearing on such application.” Fed. R. Civ. P.
55(b)(2) (2001).
*****
See Taylor v. Boston & Taunton Transp. Co., 720 F.2d
731, 733 (1st Cir. 1983); H.F. Livermore Corp. v.
Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir.
1970); 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay
Kane, Federal Practice and Procedure § 2687 (3d. ed. 1998).
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interminable delay and continued uncertainty as to his rights.
The default judgment remedy serves as such a protection.”). We
conclude that by failing to respond or appear, Distribuidora
lost its right to notice of the trial date.
3. Damages Hearing
Distribuidora argues that it was never given the
opportunity to be heard, not even on the issue of damages.******
In this case, Ortiz-Gonzalez elected to receive, and was
awarded, statutory damages against Distribuidora pursuant to 17
U.S.C. § 504(c)(1) (2001) (“ . . . the copyright owner may
elect, at any time before final judgment is rendered, to
recover, instead of actual damages and profits, an award of
statutory damages for all infringements involved in the
action.”). After considering the record, the district court
******
Distribuidora does not appeal the amount of the
statutory damages granted, but instead argues that Ortiz-
Gonzalez should be considered ineligible to receive statutory
damages; had there been a hearing on statutory damages,
Distribuidora contends it would have been able to demonstrate
that such damages were not justified because Ortiz-Gonzalez was
unable to prove his claim of infringement against the
defendants, Fonovisa and Distribuidora. As discussed
previously, there is no basis for this claim because
Distribuidora had defaulted and was found to be liable as a
direct infringer. As an infringer, Distribuidora faced
statutory damages. Although a party may demand a jury
determination of the amount of statutory damages to be awarded,
Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 355
(1998), Distribuidora never made such demand.
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decided that no hearing was necessary and awarded statutory
damages within the prescribed range.
Both Section 504(c)(1) and Rule 55 grant wide
discretion to the district court. A copyright owner may elect
to recover in statutory damages a “sum of not less than $750 or
more than $30,000 as the court considers just.” 17 U.S.C. §
504(c)(1); see also Fed. R. Civ. P. 55(b)(2).******* Discretion as
to the judgment or the need for a hearing on damages is vested
with the district court. Pope v. United States, 323 U.S. 1, 12
(1944) (“It is a familiar practice and an exercise of judical
power for a court upon default, by taking evidence when
necessary or by computation from facts of record, to fix the
amount which the plaintiff is lawfully entitled to recover and
to give judgment accordingly.”). The discretion granted to the
d i s t r i c t c o u r t w a s n o t a b u s e d .
B.
*******
If, in order to enable the court to enter judgment or
to carry it into effect, it is necessary to take an account or
to determine the amount of damages or to establish the truth of
any averment by evidence or to make an investigation of any
other matter, the court may conduct such hearings or order such
references as it deems necessary and proper and shall accord a
right of trial by jury to the parties when and as required by
any statute of the United States.
Fed. R. Civ. P. 55(b)(2) (2001).
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Fonovisa appeals the district court’s denial of its
motion requesting attorney’s fees pursuant to the Copyright Act,
17 U.S.C. § 505.******** Fonovisa argues that the district court
erred in holding that its motion requesting attorney’s fees was
moot. Mootness is a jurisdictional question and is reviewed de
novo. Verhoeven v. Brunswick Sch. Comm., 207 F.3d 1, 5 (1st
Cir. 1999).
Concurrent with Ortiz-Gonzalez’s voluntary dismissal,
the parties entered into an agreement whereby Fonovisa agreed
not to collect any award of attorney’s fees or costs. Based on
this agreement, the district court ruled that Fonovisa’s motion
for attorney’s fees was moot. Fonovisa argues that, although
the agreement does prevent it from collecting attorney’s fees,
the agreement was structured so that Fonovisa could receive a
judgment on attorney’s fees. Despite being unable to collect on
********
Ortiz-Gonzalez argues that this court lacks
jurisdiction because Fonovisa appealed immediately after the
denial of its motion, rather than after the final judgment was
issued. This is incorrect. “A notice of appeal filed after the
court announces a decision or order—but before the entry of the
judgment or order—is treated as filed on the date of and after
the entry.” Fed. R. App. P. 4(a)(2) (2001). This rule allows
notice of appeal from a non-final decision to operate as an
effective notice of appeal from a decision that would be
appealable upon final judgment. FirsTier Mortgage Co. v.
Investors Mortgage Ins. Co., 498 U.S. 269, 276 (1991).
Fonovisa’s filing of its notice of appeal comports with Rule
4(a)(2) and this court, therefore, has jurisdiction to hear the
appeal.
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such a judgment, Fonovisa contends that the judgment for
attorney’s fees would be valuable to deter other potential
plaintiffs from filing frivolous claims for copyright
infringement. Thus, according to Fonovisa, the case is not moot
because the judgment on attorney’s fees would be legally
valuable.
A federal court’s jurisdiction is restricted to the
resolution of cases or controversies. U.S. Const. Art. III, § 2;
Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990). A case
generally becomes moot when the controversy is no longer “live”
or the parties “lack a legal cognizable interest in the
outcome.” Murphy v. Hunt, 455 U.S. 478, 481 (1982). “The duty of
this court, as of every other judicial tribunal, is to decide
actual controversies by a judgment which can be carried into
effect. . . .” Mills v. Green, 159 U.S. 651, 653 (1895), cited
in Local No. 8-6, Oil, Chem. & Atomic Workers Int’l Union v.
Missouri, 361 U.S. 363, 367(1960); see also Morgan v. McDonough,
689 F.2d 265, 273 (1st Cir. 1982).
Fonovisa admits that the court’s judgment will not be
“carried into effect” and cannot “affect the matter in issue in
the case before it,” Mills, 159 U.S. at 653, but will instead
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hopefully impact future cases.********* Although possibly being of
some value in future situations, a judgment by the district
court on the issue of attorney’s fees would be superfluous
because of the agreement. Cf. Riva v. Massachusetts, 61 F.3d
1003, 1011 (1st Cir. 1995) (requiring in the context of ripeness
that “the controversy is narrowly defined and is susceptible to
specific relief, . . . and without much risk that the court’s
opinion will prove superfluous.”). Courts are not required to
go through the symbolic step of entering a judgment which the
beneficiary has already agreed not to collect merely so that the
judgment can be waived as a red flag to serve the private
interests of the recipient in other cases. Because there is no
actual live controversy here, the district court was correct to
dismiss the motion for attorney’s fees as moot.
III. CONCLUSION
*********
Ortiz-Gonzalez offered to voluntarily dismiss his
claims against Fonovisa with prejudice, so long as Fonovisa did
not recover attorney’s fees or costs. According to Fonovisa, it
agreed, subject to the condition that it remain free to pursue
a judgment for attorney’s fees. The handwritten agreement
states, “Defendant hereby will not collect from Plaintiff any
award for cost [sic] and attorney fees that may be granted by
the court.” The words of this agreement can be read to support
Fonovisa’s contention that Fonovisa could seek fees, but not
recover them. We need not determine if this is the correct
interpretation of the agreement, however, because even assuming
Fonovisa’s position is correct, the district court would still
lack jurisdiction due to mootness.
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Because we find no error in the district court’s
rulings, we AFFIRM.
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