Opposition Brief — Estate of Vane v. Fair, Inc.

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No. 88-755

In The

Supreme Court of the United States

October Term, 1988

ra’

—

ESTATE OF DEAN M. VANE,

Petitioner,

vs,

THE FAIR, INC., AND VANCE-MATHEWS, INC.,

Respondents.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

ra’

RESPONDENT, THE FAIR, INC.’S,

BRIEF IN OPPOSITION TO CERTIORARI

ray

Tuomas L. Hanna

Menarry, WEBER,

KeitH & GonsouLin

Post Office Box 16

Beaumont, Texas 77704

(409) 835-5011

Attorneys for Respondent,

The Fair, Inc.

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

or call collect (402) 342-2831

COUNTERSTATEMENT OF

QUESTION PRESENTED

Whether the Court of Appeals was correct in holding

that the District Court did not commit error in finding that

the evidence submitted by Petitioner concerning damages

based on profits attributable to an alleged copyright in-

fringement was speculative.'

‘Respondent, The Fair, Inc., is responding only to Petition-

er’s Question No. 1 as Question No. 2 is not germane to this

Respondent.

CORPORATE AFFILIATION

}

Respondent, The Fair, Inc., is a Texas corporation that

has no parent corporation, no subsidiaries other than whol

ly owned subsidiaries, and no affiliate corporations.

lil

TABLE OF CONTENTS

COUNTERSTATEMENT OF QUESTION PRE-

SENTED

CORPORARTE AFFILIATION

TABLE OF CONTENTS

TABLE OF AUTHORITIES

OPINIONS BELOW

JURISDICTION

STATUTES AND RULES OF PROCEDURE IN-

VOLVED

COUNTERSTATEMENT OF THE CASE

REASONS FOR DENYING THE WRIT

THE DECISION BELOW IS CLEARLY CORRECT

THERE IS NO IMPORTANT GROUND FOR

GRANTING CERTIORARI

THERE IS NO CONFLICT OF DECISIONS

CONCLUSION

TABLE OF AUTHORITIES

Page

CASES

Callaghan v. Myers, 128 U.S. 617, 9 S.Ct. 177, 32

PE ie; Fee nu nnn ener oreo Na ron 1]

Easter Seal Society v. Playboy Enterprises, 815

F.2d 323, REH. DEN. 820 F.2d 1223 (5th Cir. 1987) — 6

Equal Employment Opportunity Commission v.

Datapoint Corp., 570 F.2d 1264 (5th Cir. 1978) 0000. 7

General Talking Pictures Corp. v. Western Elec-

tric Co., Inc., et al, 304 U.S. 175, 58 S.Ct. 849,

82 L.Ed. 1273, adhered to 305 U.S. 124, 59 S.Ct.

116, 88 L.Ed. 81, REH DEN. 305 U.S. 675, 59

AR, es Ce es Se CD octets 8

Goodman v. Lukens Steel Co., 482 U.S. —, 107

S.Ct. 2617, 96 L.Ed.2d 572 (1987) ........... aia Peo 9

Pullman-Standard v. Swint, 456 U.S. 273, 102 S.Ct.

+, | Mv, ore LE oe |. - | eee eee 9

Rice v. Sioux City Memorial Ilospital Cemetery,

Inc., 349 U.S. 70, 75 S.Ct. 614, 99 Ld. 897 (1955) — 9

Russell v. Price, 612 F.2d 1123 (9th Cir. 1979) 00.

Sheldon v. Metro-Goldwyn Pictures Corp., 309

U.S. 390, 60 S.C't. 681, 84 L.Ed. 825 (1940) 20000000000. 11

Sid & Marty Kroft Television v. McDonald’s

Corp., 221 U.S.P.Q. 114 (D.C.C.D. Calif., 1983) ........... 11

Suqma PhotoNews, Inc. v. High Society, 778 F.2d

Be NE I IN sresccseseenteressttiapsecsntneis Ceti Adeseeecnsdnindinhertanleia 11,12

Taylor v. Meirick, 712 F.2d 1112 (7th Cir. 1983) ..11, 12

TABLE OF AUTHORITIES—Continued

Page

STATUTES AND RULEs

Us. +e) eee 2, 11

Fed. R. Civ. P. 52(a) | 2 6, 7, 8, 9, 12

Supreme Court Rule 17 a. seacoast ona

No. 88-755

In The

Supreme Court of the United States

October Term, 1988

ESTATE OF DEAN M. VANE,

Petit

THE FAIR, INC. AND VANCE-MATHEWS, INC.,

Re sponde nis

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

RESPONDENT, THE FAIR, INC.’S,

BRIEF IN OPPOSITION TO CERTIORARI

—( —

OPINIONS BELOW

The opinion of the Fifth Circuit Court of Appeals is

reported at 849 F.2d 186 and is attached to letitioner’s

Appendix at pages A-1 through A-26. The opinion of

the United States District Court for the Eastern District

of Texas, Beaumont Division, is reported at 676 F. Supp.

133 and is attached to Petitioner’s Appendix at pages

A-27 through A-45.

JURISDICTION

I : | requisites are adequately set forth

}? ? \\ { t arirtio rl te thie I nites States

' \ > I I th 4 reult The P 10 )

STATUTES AND RULES OF

PROCEDURE INVOLVED

17 U.S.C. §504(b) provides in pertinent part:

tctual damages and profits. The copyright own-

r is entitled to recover the actual damages suf

fered by him or her as a result of the infringe-

ment, and any profits of the infringer that are

attributable to the infringement and are not taken

into account in computing the actual damages.

In establishing the infringer’s protits, the copy-

right owner is required to present proof only of

the infringer’s gross revenue, and the infringer

is required to prove his or her deductible ex

penses and the elements of profit attributable to

factors other than the copyrighted work.

Fed. R. Civ. P, D2 (a) provides in pertinent part:

(a) Effect. In all actions tried upon the facts with

out a jury or with an advisory jury, the court

shall find the facts specially and state separately

its conclusions of law thereon, aid judgment shall

he entered pursuant to Rule 58; ... Findings of

fact, whether based on oral or documentary evi-

dence, shall not be set aside unless clearly erro-

neous, and due regard shall be given to the oppor-

tunity of the trial court to judge of the eredi-

bility of the witnesses.

Sup. Ct. R. 17 provides in pertinent part:

l. A review on writ of certiorari is not a matter of

right, but of judicial discretion, and will be

granted only when there are special and im-

portant reasons therefor. The following, while

neither controlling nor fully measuring the

Court’s discretion, indicate the character of rea-

sons that will be considered.

(a) When a federal court of appeals_has ren-

dered a decision in conflict with the decision

of another federal court of appeals on the

same matter;...or has so far departed from

the accepted and usual course of judicial pro

ceedings; or so far sanctioned such a de-

parture by a lower court, as to eail for an

exercise of this Court’s power of supervision.

peals has decided an important question of

federal law which has not been, but should

be settled by this Court, or has decided a

federal question in a way in conflict with

applicable decisions of this Court.

o——

COUNTERSTATEMENT OF THE CASE

Petitioner Estate of Dean M. Vane (‘‘Petitioner’’ or

‘“Vane’’) was a commercial photographer who was hired

by Respondent, The Fair, Ine., (‘‘Respondent’’ or ‘‘The

fair’’) to produce slides and photographs for use by The

air in advertising materials. His employment began

around March 1, 1983, and continued through the month

of May, 1984. There was no written contract or agree-

ment between Petitioner and The Fair. During that

period of time Petitioner at The Fair’s direction took

over two thousand slides and photographs for which he

was paid and all of which he turned over to The Fair for

its use. Initially the material was used in printed adver-

tising but at a later date fifty-two of the slides were in-

corporated into television commercials. These commer-

cials were produced and run intermittently from October

21 through December 9, 1983, and from March 15 through

June 29, 1984. The television commercials were pro-

duced by Respondent Vance-Mathews, Ine. (*‘* Vance-

Mathews’’) which is an advertising agency located in

Beaumont, Texas.

The Fair contended that Petitioner had sold the slides

and photographs to The Fair. All of the slides and photo-

graphs were kept by The Fair in its advertising depart-

ment as a part of their stock photograph file. When the

decision was made in October, 1983, to develop a new tele-

vision advertising campaign fifty-two of those slides were

chosen, along with other stock phototgraphs and _ slides

not produced by Petitioner, for inclusion in the commer-

cials. Petitioner was not consulted because The Fair per-

eeived, rightly or wrongly, that it owned the photographs

and had purchased the right to use them for advertising

purposes. None of the slides or photographs delivered

to The Fair bore a copyright mark or notice. Petitioner

was paid in full on each of the invoices which he submitted

to The Fair. However, no payment was or has been made

for the television usage of these slides. Petitioner com-

plained of the use of the slides in television advertising

in July, 1984, and none of his material was used after that.

However, Petitioner did not file tor copyright registra-

tion of the slides and photographs until after litigation

had begun.

The suit, which was filed under the Copyright Act of

1976, 17 U.S.C.S. § 101 ef seq., was tried to the district

court without a jury. At trial, Petitioner introduced a

videotape containing eleven television commercials which

allegedly utilized Petitioner’s slides. Analysis of that ex-

hibit showed that in the eleven commercials that photo-

graphs taken by Petitioner comprised from zero percent

to forty-two percent of the commercial running times. It

also showed zero percent usage in two commercials and

five commercials in which all of the slides utilized were

taken by the Petitioner. Other evidence produced at trial

showed that the fifty-two slides were used from periods

of time ranging from one day up to one week and eight

were used on multiple occasions. The court also heard

testimony concerning the actual market value of the slides

and photographs with testimony ranging from a low of

$12,000.00 up to a high of $60,000.00.

Because Petitioner had not timely filed for copyright

registration, the recovery of statutory damages and attor-

neys’ fees was not available to him. He instead sought, in

addition to his actual damages, any profits which were

attributable to the use of the questioned slides in tele-

vision advertising. To prove this element of damage Peti-

tioner presented testimony concerning a multiple regres-

sion formula developed by a marketing professor from

the University of Ilouston. This testimony was questioned

vigorously on cross-examination and by direct testimony

of The Fair’s chief financial officer.

The Fair raised issues of whether the slides in ques-

tion were the result of work for hire and whether or not

the Petitioner had waived his copyright rights by failing

to include notice on the slides or by failing to object to

their publication without such notice. The Fair also con-

tested the issue of damages, both actual and profit-related.

After receiving briefs and arguments of counsel, the trial

court held that Petitioner was entitled to actual damages

and granted $60,000.00 as market value of the slides. He

denied recovery for The Fair’s alleged profits stating that

there was not sufficient proof of profits attributable to

the use of the infringed material.2 Therefore, the court

made no damage award for profits and ruled that The

Fair did not have to prove its cost for apportionment.

Petitioner gave notice of appeal and, subsequent to

that, The Fair likewise gave notice of appeal. However,

based on the Fifth Circuit’s intervening decision in Laster

Seal Society v. Playboy Enterprises, 815 F.2d 323, REH.

DEN. 820 F.2d 1223 (Sth Cir. 1987) The Fair dropped its

cross-appeal which had questioned the court’s ruling on

the issue of work for hire. Also, The Fair later aban-

doned its appeal on the issues of waiver and lack of no-

tice of the copyright because of the ‘‘clearly erroneous

rule’’ set out in Rule 52(a), Federal Rules of Civil Pro-

cedure.

After briefs were submitted and oral argument heard,

the Fifth Cireuit dealt with the merits of Petitioner’s ap-

peal which were substantially the same questions raised

here and affirmed the District Court’s judgment. They

rejected Vane’s argument that he should be granted The

Fair’s alleged profits from the use of the infringing ma-

terial and held that the trial court was not in error in find-

See Finding of Fact No. 9, page A-37, Petition.

ing the Petitioner’s attempt to show revenues attributable

to the infringement was speculative. They also reviewed

the record, including the trial transcripts and statement of

facts, especially as it concerned the testimony of Peti-

tioner’s expert witness, Dr. Herbert Lyon. They stated

that the trial testimony showed at least three reasons why

the use of an undifferentiated figure in a multiple regres-

sion program would not necessarily establish gross profits

or income which would be attributable to the use of in-

fringing material. First, was that the cost of a slide used

in a commercial is only one of many expenses involved;

second, was that the infringed slides appeared during only

a part of the time that the comm-rcials were on the air;

and, finally, that the model introduced into evidence did

not purport to show the relative importance of different

elements of the commercials in generating alleged profits.

After their review and analysis of the facts before the

trial court, based on the principle enunciated in Rule 52(a)

¥.R.C.P. and the case of Equal Employment Opportunity

Commission v. Datapoint Corp., 570 F.2d 1264 (Sth Cir.

1978) the Fifth Cireuit concluded that the case should be

affirmed.

REASONS FOR DENYING THE WRIT

The writ sought by Petitioner should be denied on

three specific grounds. First, the Fifth Cireuit has cor-

rectly decided this case on the merits; second, there is no

important ground for granting certiorari; and third, there

is no conflict of decisions.

THE DECISION BELOW IS CLEARLY CORRECT

This case is one which deals with a question of factual

interpretation. The trial court heard all the evidence

and concluded that it would award Petitioner maximum

recovery for his actual damages. In fact, the testimony

showed that fifty-two slides were used and the maximum

value placed on the slides by Petitioner’s expert witness

was $1000.00 per slide. As a result, the $60,000.00 awarded

as actual damages exceeded the Petitioner’s highest stated

value. However, the Court also evaluated the Petition-

er’s testimony regarding profits attributable to use of

the infringed material and ruled that the testimony was

speculative and denied recovery on that theory.

The only question presented is one of fact issue re-

view. That is, the question is whether or not the trier

of fact, the trial judge in the district court, was clearly

erroneous in rejecting the attempted proof of the Peti-

tioner at trial. The Fifth Cireuit reviewed these find-

ings of fact and conclusions of law, the statement of facts

in the case below and the identical authority presented by

Petitioner and held that the case fell within the ambit of

Rule 52 of the Federal Rules of Civil Procedure. That

ruling is entirely consistent with the ruling of this Court

in the case of General Talking Pictures Corp. v. Western

Electric Co., Inc., et al, 304 U.S. 175, 58 S.Ct. 849, 82 L.Ed.

1273, adhered to 305 U.S. 124, 59 S.Ct. 116, 83 L.Ed. 81,

REH DEN. 305 U.S. 675, 59 S.Ct. 355, 83 L.Ed. 437 (1938).

The Supreme Court held in that case that whether or not

the respondents had acquiesced in a patent infringement

and whether or not they were estopped to assert their

cause of action were dependent upon the facts in the ease.

The court held at p. 851 as follows:

‘‘Granting the writ would not be warranted merely

to review the evidence or inferences drawn from it.

Southern Power Co. v. North Carolina Pub. Serv. Co.,

263 U.S. 508, 44 S.Ct. 164, 68 L.Ed. 413; United States

v. Johnston, 268 U.S. 220, 227, 45 S.Ct. 496, 69 L.Ed.

925. Moreover, the decision on that point rests on con-

current findings. They are not to be disturbed unless

plainly without support. United States v. Chemical

Foundation, 272 U.S. 1, 14, 47 S.Ct. 1, 6, 71 L.Ed. 131;

United States v. McGowan, 290 U.S. 592; 54 S.Ct.

95, 78 L.Ed. 522; Alabama Power Co. v. Ickes, 302

U.S. 464, 58 S.Ct. 300, 82 L.Ed. 374. There is evidence

to support them.’’

Rule 52(a) of the Federal Rules of Civil Procedure

is designed to cover just such a situation. See Pullman-

Standard v. Swint, 456 U.S. 273, 102 S.Ct. 1781, 72 L.Ed.

2d 66 (1982) at pages 78-79 and Goodman v. Lukens Steel

Co., 482 U.S. —, 107 S.Ct. 2617, 96 L.Ed.2d 572 (1987) at

page 584. There is nothing to suggest that the trial court’s

ruling was clearly erroneous and, on such a record, this

Court should deny the writ.

fay

THERE IS NO IMPORTANT GROUND

FOR GRANTING CERTIORARI

Supreme Court Rule 17 notes that review by writ of

certiorari is not a matter of right, but one of sound, judi-

cial discretion. Therefore, certiorari should be granted

only in cases where there are special and important rea-

sons for Supreme Court review. This Court has held in

the case of Rice v. Sioux City Memorial Hospital Ceme-

tery, Inc., 349 U.S. 70, 75 S.Ct. 614, 99 L.Ed. 897 (1955)

at p. 74 U.S. that ‘‘special and important reasons imply

a reach to a problem beyond the academic or the episodic.’’

Further, the Court stated in that opinion that certiorari

should not be granted ‘‘except in cases involving prin-

ciples the settlement of which is of importance to the pub-

lic, as distinguished from that of the parties... .’’ /bid,

at p. 79.

The petition filed by Vane presents no important is-

sue of federal law. Trial courts have been reviewing evi-

dence and testimony as triers of fact since the foundation

of our judicial system. There is nothing in this decision

that attempts to abrogate one word of the Copyright Stat-

ute as set out in 17 U.S.C. 101 ef seg. There is nothing in

this ruling which says that a multiple regression program

cannot be used in court to prove profits or establish proof

in civil rights or voting right cases. The issue was and

still is whether or not Petitioner had met its burden of

proving to the satisfaction of the trier of fact that the

alleged profits were attributable to the use of his slides.

No law is threatened. No class of persons will lose

their protection under law. No havoe will be wrecked on

the judicial system. There is no important question of

federal law which has not been but should be settled by

this Court. This is a case where the Court should exercise

its discretion by denying the writ.

THERE IS NO CONFLICT OF DECISIONS

Petitioner nowhere in the Question Presented at p. i

of his petition alleges that there exists a conflict between

the decision of the Fifth Circuit and another federal court

of appeals or this Court. However, in his argument at

p. 25 he alleges that the Fifth Circuit’s holding conflicts

with holdings in the Second, Seventh and Ninth Circuits,

citing Taylor v. Meirick, 712 F.2d 1112 (7th Cir. 1983) ;

Syqma PhotoNews, Inc. v. High Society, T78 F.2d 89 (2nd

Cir. 1985) and Russell v. Price, 612 F.2d 1123 (9th Cir.

1979) and also with decisions of this Court, citing the cases

of Callaghan v. Myers, 128 U.S. 617, 9 S.Ct. 177, 32 L.Ed.

547 (1888) and Sheldon v. Metro-Geldwyn Pictures Corp.,

309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825 (1940). He at-

tempts to create the perception of a conflict by stating

that the Fifth Cireuit’s finding implies an improper place-

ment of the burden of proof. He says at page 22 of his

brief that, ‘‘the Fifth Cireuit Court of Appeals held that

the burden of proof to apportion profits not attributable

to the infringement from the profits attributable to the

infringements rests with the copyright owner.’’ (Petition,

pp. 22-23). One searches in vain for such language in the

Court’s opinion. What the Fifth Cirenit did hold is that

there were problems in the Petitioner’s proof of profits

attributable to the use of the infringing material. They

held that the question of determination was a fact spe-

cific question and that the trial court was not in error in

rejecting the Plaintiff’s attempted proof. This is not a

shift of the burden of proof.

Further, Petitioner states that the Copyright Act,

Title 17 U.S.C. § 504(b) states that a copyright owner is

required only to present proof of the infringer’s gross

revenues. That much is true. However, this Rule has

long been interpreted to require the plaintiff to present

proof of revenues that are attributable to the use of the

infringed work. See Russell v. Price, supra, at page 1130,

quoted below. See also Sid & Marty Kroft Television v.

McDonald’s Corp., 221 U.S.P.Q. 114 (D.C.C.D. Calif.

1983).

The cases cited by Petitioner are not in conflict with

the decision in this ease. Neither the Fifth Cireuit nor the

trial court placed any burden on the Petitioner other than

the burden to prove profits which were attributable to the

use of the infringed material. The only case cited that

speaks to Rule 52(a) is the Sygma Photo case. There the

Second Circuit recognized the stringent requirements of

Rule 52(a) of the Federal Rules of Civil Procedure but

found the district court’s application of the facts ‘‘clearly

erroneous.’’ In the case of Taylor v. Meirick, supra, the

court dealt with the question of burden of proof by stating

that the plaintiff could have made out a prima facie case

for an award of infringer’s profits by showing his gross

revenues from the sale of the infringing material. The

court went on to state that,

‘‘it was not enough to show Meirick (Defendant’s)

gross revenues from the sale of everything he sold,

which is all, really, that (Plaintiff) did. If General

Motors were to steal your copyright and put it in a

sales brochure, you could not just put a copy of Gen-

eral Motors corporate income tax return in the reeords

and rest your case for an award of infringer’s prof-

its.”’ (p. 1122).

In fact, the most illustrative language concerning the lack

of conflict in the cases cited by Petitioner is to be found in

Russell v. Price, supra. At page 1130 of its opinion, the

Ninth Circuits tates as follows:

‘*Plaintiff’s confusion stems in part from the meaning

of the term ‘actual profits’. It is clear from a reading

of the statute (17 U.S.C. $ 101(b)) that the infringer’s

profits to which the copyright proprietor may be en-

titled consists of the gross receipts or sales’ profits

from the infringing use of the plaintiff’s work, which

is the plaintiff’s burden to establish, less any direct

costs incurred by the defendant in connection with the

unauthorized use, on which the later party bears the

burden of proof.”’ (p. 1130-1131).

That is exactly what the trial court and the Fifth Circuit

said in this case. That is exactly what the Petitioner failed

to establish to the satisfaction of either. There is no mis-

placement of the burden of proof and there is no conflict.

The writ should be denied.

CONCLUSION

For these reasons, the Petition for Writ of Certiorari

filed by the Petitioner should be denied.

Respectfully submitted,