Court Strikes Sensible Balance in UFC Piracy Case

Adding to this site’s archived case summaries involving UFC PPV piracy awards, reasons for judgement were released this week by the US District Court, ND Indiana, Hammond Division, assessing damages following the commercial piracy of UFC 168.

In this week’s case (Joe Hand Promotions, Inc v. Chapman) the Defendant displayed UFC 168 at a Lounge without paying the commercial sub licencing fees which would have come to $1,250 based on the establishment’s capacity.

The Plaintiff sued and obtained default judgement seeking $26,400 in damages.  The Court found this demand excessive and instead awarded the cost of the program and then further tripled this amount for punitive and deterrent purposes.  In finding this an appropriate amount of total damages Chief District Judge Philip Simon provided the following reasons:

Because Joe Hand has provided its rate chart for the program, I will award statutory damages in the amount of $1,250 based on the Showtime Lounge’s reported capacity. Turning to consideration of enhanced damages, §605(e)(3)(C)(ii) allows me to increase the statutory damages “by an amount of not more than $100,000 for each violation” if I find that “the violation was committed willfully and for purposes of direct or indirect commercial advantage or private financial gain.” Joe Hand provided an affidavit from its president indicating that Joe Hand’s programming “cannot be mistakenly, innocently[,] or accidentally intercepted.” [DE 14-1 at 3.] In addition, the Gunn affidavit establishes that at least 43 patrons were present during the violation [DE 14-2 at 1]. Based on this record, I find that the defendants willfully committed the violation for the purpose of direct commercial advantage or private financial gain and are subject to enhanced damages under §605(e)(3)(C)(ii).

Awarding statutory damages according to Joe Hand’s rate chart without any enhancement would only compensate Joe Hand for its subscription loss, “not fully divest the defendants of any profits derived from unlawfully exhibiting the program.”Estrada, 2014 WL 2609751, at *3. Courts consider a range of factors in setting enhanced damages, including: “(1) the number of violations; (2) defendant’s unlawful monetary gains; (3) plaintiff’s actual damages; (4) whether defendant advertised for the event; and (5) whether defendant collected a cover charge on the night of the event.” McCausland, 2012 WL 113786, at *4 (citing Kingvision Pay-Per-View, Ltd. v. Rodriguez, 2003 WL 548891, at *2 (S.D.N.Y. Feb. 25, 2003)). Courts also consider the proximity of the establishment to an urban area, the number of screens displaying the program, and “the deterrent effect of the award, with an eye toward imposing an award that is substantial enough to discourage future lawless conduct, but not so severe that it seriously impairs the viability of the defendant’s business.” Id. (citation omitted).

While the defendants didn’t charge a cover on the night of the event and there is no evidence they advertised for the event or committed multiple violations, they displayed the program on five screens and served at least 43 patrons. Showtime Bar and Grill is also located in Gary, Indiana, a city within the Chicago, Illinois metropolitan area. However, I am most concerned with the need to send a strong deterrent signal. By failing to appear and defend against the lawsuit, the defendants gave up the opportunity to explain how an award of enhanced damages might impair the viability of their business. Considering all of these factors, I will triple the statutory damages. See Tex. Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 639 (1981)(“The very idea of treble damages reveals an intent to punish past, and to deter future, unlawful conduct.”). Tripling $1,250 results in a total of $3,750 in enhanced statutory damages.

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