Reply Brief for Petitioner — F. W. Woolworth Co. v. Contemporary Arts, Inc.

LIBRARY

SUPREME COURT, U.S.

Supreme ite uf the United D States

+H Oc TOBER TrerM, 1952

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_~-

No. 42

ee

re W. “WOOL LWORTH CO., :

P e titioner,

aqainst be A ce ot

CONTEMPORARY ARTS, INC.,

Respondent.

ON WRIT OF CERTIORARL TO THE UNITED STATES COURT. OF

$. -APPEALS FOR THE FIRST CIRCUIT,

rk one

—

REPLY BRIEF FOR PET. TTIONER,

Martin A. Scuenck,

Kexnetru W, GREENAWALT,

Attorneys for Petitioner,

~~ « One Wall Street,

New York 5, New York.

Joux H. Barner, e

Of Counsel.

~

—S

» 130, CEDAR STREET, NEW YORK, wu, 4-333

REPEAL PRINTING CO., INC,

: : PAGE

Ports’? 1—Respondent’s statement of. the facts relat-

Ing to danuiges and profits is Inaccurate and iti-

complete

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Pornr TI. Respondent has Tulted to justify the Dis-

triet Court's award of st; itutory damages and the

Court of Appeals* award of statutory damages

plus profits. The cases cited by respon dent.do not

support its contention that the District Catt has |

complete diseretion under” $104¢h). of the Copy-

right Aet to award either, ac tual damages and

profits or pratutary damages ie 2

Port: TLI—Mueéh ofthe: 4 respon lent’ s. brief consists

of irrelevant and prejudicial matter

(' ONCLUSION Ti OE slater ata ya = AOR ae Pie tata tomes f taser 13

: ra . / , my

| mS e * z. : : :

ae ‘ . Table of Cases

: : ; - ; =

Advertisers Eachange, Ine. %. Hinkley, 8 Cir. 95

ULS.P.Q. 124° (Oet. 21; 1952,-not offi¢ially reported) 9

Davila v. Brunswick-Balke Colle nder Cos BO Cir,

yw 9A F. (2d) 567 (1938), cert, den. 304 U.S, 5729...” 1)

Douglas v. C unningham, 294 U.S. 207 ee Liab Oy 15 16

Jewell-LaSalle fiealty Cs: i, Buck, 285 U: a 20)2

Johns & Johns Printing Co, Paull. Pijnste Music. ~.

Corp., 8 Cir., 102 F. (2d) 999 E51 6 BUR Bla ree ade 0

il Se

Bras as, SA

ee st ail ; is i PAGE

Malsed vy. Marshall Field Co., 96 F.Supp. 372°CU.S8.

BA: W. 1), Wash, ER MaRS Peers PAS aroha ts Wee ae

Sheldgn y. Metro- Gotta un Pictures § Corp, 309 U.S.

390, 399 (1940) Ea SERRA neat ninety od

Toksvi iy Vv. Bruce Publishing ( rs Boch | ats 18! F. (2d): |

664 (19: yO). eaatasuacers as Yih AS a Len ae oie Re ae e rey

Washingtonian Pub. §Co., Ine. Vv. iene Cir., ,

pes i Te gee PW i 2 ee enue A a me a EN ee

Westermann Co. ve Dispatch Printing.Co. 249 US

RES) “ELDAR 23 ia un) oO Ae ei ee eee epee et

Widenshi v, Shawies, Berns tem & Co. Ine., 5 AChr.,.

NEE: £20 LAS et te ee Ce Ppa 7

[ niversal Pictures Co. Harold L ieor Corp. a Cit.

.162 F. (2d) 354 (1847) PRs Ne Be See Ae a ee

Statute. Cited _

Title 17, UV. S. Code: :

Section’ 101(b) GR ee as 641069?

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| Supreme: ‘Court of the United States

Ocrose R Treat, 1952

: No, 42 |

Lt Pe ‘ . no an ace in “4 <

KF. OW, Wodiworrn Co.,

“et Petitioner,

ax — against

eCoNnTEMPORARY Arts, PNG.,

S

Respondent,

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; A

e : fo : e

3 > ON AVRIT OF CERTIORARE TYsTHE UNITED STATES COURY OF

oe

er PpreALsS FOR THE FIRS® CERGEUTT

‘REPLY BRIEF FOR PETITIONER

ay

POINT I

Respondent’s statement of. the facts. alin to

damages and, profits i is inaccurate and incomplete.

The only factual matter in Respondent’s **Statement

of the. Case’? hearing on the application of the damage

section of the Copyright. Act, which appears on pages 6

and 7 of its briet, does not fairly reflect the proofs in the

Record,

Respondent ‘asks this Court (Br. p. 6) ‘to note that.

respondent actually suffered actual damages ¢ ..) far in

excess of $5,000. . 27°. There was no proof that respond.

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ent suffered actual damages j in that amount or any amount,

or that it suffered actual damages at all (see Pet. Br. pp.

es | ae Cee |

mn the same page, eee states that the sales ‘of

its Cocker Spaniel were ‘‘killed by the Woolworth piracy”’,

There was no stich evidence. The only statements in the

Record to this effect were non-probative assertions made

by its counsel ‘in colloquy (R. 32, 114, 244).

Responderit also states (Br. p. 6) that “dealers ean--

celled their orders for Respondent's dog line’’,. and im

support of this statement quotes Mr. Fox as “testifying”

in the Record at page 118, as follows:

‘We lost two of our big shops. out’ there

(Chicago) with the gene! ral complaint of copying.”’

“The Reeord plainly shows. at page 118 that ee “testi.

* mony’’ was stricken by the Court. There Was no evi-

dence to support said statement, >

_ Respondent further states (Br..p, 6): ‘Respondent was

| then compelled to denn na new Cocker (Plf’s. Exh, 12)

to replace the ee gree Respondent does not and

‘annot cite any evidence to ‘that effect. Here, again,

“responde nt is ‘representing as. evidence what was a mere

“assertion of its: trial ‘counsel (R. 244, : 246).-:In fact, Plain-

tiff's Exhibit 12 was not even offered hy plaintiff fox that

purpose, but solely to show ‘that it: is still possible to,

uke a cocker spaniel dog which is anatomically correct

‘and authentic and realistic, without copying phyintiff’s

prey lous Jdn Allen model*’ (Ite 70-2, 90) ; and said exhibit

Was received for that limited” purpose (RR. 90),

(1) ) It should be noted that the tri: ir court’s re fergnce®S, at pp. 244

and. 247 of the Record; to Fox's prior “testimony” as to damages were,

in reality, mercly to testimony that had been stricken or which had

been offered and excluded. ee : :

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urthermore, respondent’s own witness, the sculptress,

Klizabeth Philbrick Hall, testified that any line ‘‘needs

changing to keép abreast, as far as sale goes’’ (R. 103);

and that need, so far as appears from the Record, was the

‘reason plaintiff’ s designer, Press, worked .up the new

design of a-cocker-spanic] thtuctie 1 represented by. Plain-

tiff’s Exhibit 2. (R. 40, 70- 71). ;

While the (rial court did exe Inde testimony. offered by |

respondent’ s counsel, purporting to show damages (the

purpose. of which, according to him was “to lay the foun-

dation for an aware of statutory damages’? (R. 114)),

respondent did not’ purse. its offer or appeal from the

rulings of exclusion. :

When, on rebuttal, the tridl court advised. respondent’ 3

counsel that it was not “coin to preclude your showing.

any evidence of actual damage’? (R.°182), respondent’s °

counsel re plied ‘*Our,reliance’ was on statutory damages’’

(R. 183). Toward the end of the trial, respondent’s ¢oun- .

sel again made a similar offer of proof, but did not follow

through, with &dmissible evidence, and the case ended, as*

it had begun, with the statement that respondent’ was

relying on. statutory “damages (244.9). .

It.was not ‘‘udmitted”’ that respondent/was unable to

prove its actual damages, from lost sales and the like, with

the certainty required by law (Res. Br. ‘p. ¢). Respond-

ent’s counsel so admitted (R. 120), but offered no proot

_to show that it was difficult. or npossible to prove its

actual damages, Here, the subject matter presented no

difficulties in’ respect of -proolt of damages, if any; and

respondent was not ‘‘forced’’ to. invoke’ the statutory

damage clause (Res. Br. yp. 7). Nave ,

(Respondent herein has sued Woolworth. It has not’

_ sued Sabin or Lepere, as it might. Any agreement between

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Sabin and Woolworth (cf. Res. Br. p. 6), even if per-

formed, would. be irrelevant to the tendered issues between

respondent and. petitioner and cannot affect Woolworth’s

position as an innocent party. ae

Petitioner certainly. is not bound by erroneous state-

ments as to the law made by the trial court or either

counsel during a co loguy on the trial (ef. Res, Br. p. 6).

Respondent, at: page 7 of its brief, states. that Pet].

tioner did not prove its protits’’, and at page 45 asserts:

‘Presimably, for “instance, the Petitioner here is

willing to pay some 26% of its gross: profits of

PO5U:46, or $17.98.”’

Responde nt then argues that Dae did not prove its

selling cost but that if it had. or if it had admitted ‘a

small amount of actual net eee » those would have been

‘inadequate’’ for responde nt and the case therefore { falls

Within the rule propounded’ by respondent that Congress

gave the District qt ourt:complete discretion to award statu-

tory damages where damages or profits are small or so

inadequate ‘that they do not provide an effective remedy

to prevent wilful and deliberate intringé ‘nient (Res. Br. pp.

14-15, 41, 434, fo, OL). The. statute, however (Section

101()) provides that: , : aa

“e * *" in proving profits the plaintiff shall le

— required to: prove sales only, and the defendant

shall be required to prove every clespent Ey

whie i he claims, % * w99

The amount of the sales are Without contradietion in the

record, And thke de ‘fendant, under the burden whieh the

statute placed upon it, proved as the only cost to he

theducted therefrom thie Wholesale cost of the does, The

rrss, jetual and recoverable profits were, therefore, not

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only the subject of precise testimony, but the subject of

stipulation (R. 26-27, 73-74). The holding of the trial

court that it was difficult, if not impossible, for the plain-

tiff to prove defendent’s profits (which was the trial eourt’s |

basis for allowing statutory damages: R. 24), was held by

the Court of Appeals to be clearly erroneous”? (R. 219).5

and, under its recalculation .the respondent has been

allowed a recovery of this actual vross profit, and, in addi-

_tion, statutory damages (R. 279). S f

While respondent now claims that defendant’s profits

~ were not proved, it ignores the decision of the Court of .

Appeals. that profits had been determined with legal cer-

tainty (R. 279). eae

. POINT ID

¥ Respondent has failed to justify the District Court’s

award of statutory damages and the Court of Appeals’ —

award of statutory damages plus profits. The cases

cited by respondent-do not support its contention that

the District Court has complete discretion under

$101(b) of the Copyright Act to award either actual

damages and profits or statutory damages.

Respondent’s basic argument in this Court, urged

throughout its-beiety is that in any Case involving copy-

right: infringement a district court has ‘*eomplete’’ or

“full discretion. te award vithty actual damages and

prolits or statutory daniages under the ‘in liew”’ clause

of Section LOG) of the Copyright Act (Res. Br.pp. 15,.

Hy 44, 49,51). At page 41 it claims:

“The right to award sfatutory damages is in no

Mey de pu nident upon the fact that theré might heve

- hay “Sone ae damage Ss Or aclual profits which

© the plaintiff!

night have recovered,”

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None of- the cases cited by respondent support this novel

construction of Section 1O1(b). Actually, as this Court

held in Douglas v. C unningham, 294 U.S. 207 (1935), the

‘in lieu’’ clause, permitting statutory damages, comes into

play ‘only when under the rules of law it is diffieult, if

not tnpossible, for x corvright owner to prove damages

or discover profits. :

When that has be ‘en shown, a Court may then ex cereise

its: discretion in assessing the amount. between’ the fixed

limits of $250 and $5,000 and, also, in applying the sé ‘hed-

ule of damages suggested by Congress. in the: statute

(Westermann Co. Vv. Dispatch Printing Co., 249:'U. S. 100

(1919); Jewell-LaSalle Realty Co. v. Buck, 2883 U.S S. 202.

(1931)). > eid

Moreover, this Court has held that where profits-alone

have been proved, the ‘in liew’ clause is imapplicable

(SheWfon v. Metro-Goldwyn BEER res Corp., 309 U. S. 390,

399 (1940)). : |

The cases. cited by respondent (Br. pp.-1o-1s, 42-4)

“Iaive no application here. With the exception of Solas

& Johns Printing Co. ¥. Pauwli-Pioncer, Music ( Corp., 8 Cir.,

LO2 FL (2d) 282 bane and Toksiig- v. Brice Publishing

| Cir, ‘ASRS Fy ) oo4 Bia none of ‘these cases

In the Johns CASE, Stee Court he that deieniank had

raused damage to the plaintiff, the amount of which was

unascertain able. Defendant attempted, on appeal, to

limit plaintiff's reeoy ery to $5.10 becanse of its statement

in answer to an interrogatory that ids net profits were

“$5. 10.) There was no‘ ‘finding as to defendant’s sales vor

elements Gf cost. The Court. of Appeals said (op. 283-4) :

‘And in the absence of proof of both actual-damia.

vos ‘nid profits, the trial court is required ty award

th® mininunn statutory sum of $250.7

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The self- “serving admission of net profits, whic h the € ‘ourt.

did not accept in that case as proof of profits, is ‘not com-

parable to the proof of profits in this case which profits

the Court of Appeals for the First C ireuit held had been

ascertained with legal certainty. Moreover-it is implicit

in the above statement of the Court, that it awarded

statutory damages only because both actual damages anc

profits -had not been proyed.,

In the Toksvig case, the Court stated that it was unable

to determine defendant’s profits, but estimated them at

between 5¢ and L0¢ per infringing copy. In finding

defendant had sold 14,262 copies, thie’ Court awarded statu- .

tory damages of $1,000, which colfes to appr&Rimately

7¢ per copy, and in all probability, at least approximates

defendant’s profits. ars

Tn Widenski ¥. Shapiro, Bernstein - Co., Inc., 1 Cir,

I4i PF. (2d) 909 (1945), the Court refused to liold that plain-

tiff’s damages are measured hy a price (as a license fee)

at which a copyright proprietor indicated his willingness

to sell an infringer, and awarded. statutory damages of

$250, since the plaintiff was harmed but could: not prove

either his aetual damages or defendant’s actual profits.

As for the other eases cited by respondent. the facts

thereof indicate that defendant's profits were not ascer-

tainable, especially in those eases involving infringement

by a perfortrance as distinguished from copying (Jewéell-

LaSalle Real fy Co. v. Buck, supra), or where the infring-

ing work is simply a portion of a larger work (Douglas vy.

C unningham, supra), In’ W estermann — Vv. Dispatch

Printing Co., supra, the Court at page 104 expressly

stated that defendant's profits had not been shown. Re.

spondent’s quotation (Res, Br. p. 44) trom this case is

taken out of context. Actually it follows the Court!s

‘statement that both parties avreed that statutory damages

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‘Court made it very clear that when it awarded profits :

rather than statutory” *dainazes, it did not do so‘in the.’

exercise of diseretion, but that it had no-elternative as —

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were applicable and that on! y then may i Court consider

what mat just” als sessinent,

Respondent, in suppor't of its theory of damages cliarges:

petitioner with “flagrant piracy’? and repeatedly suggests

that the infringement -has been willful and deliberate ap-

parently to justify the penalty which the District Court

imposed. As pointed out before, this is contrary to the

statute forbidding penalties and also contradicts respond-

ent’s own concession: on the trial that petitioner was ‘an

‘innocent by ‘stander’? SEW TORe eine | .

Respondent’ s attempt (Res. Br. pp. 45-9) to distinguish

the cases. cited in Petitioner’s’ Brief is algo fatile: because

those ‘ases manifestly vegative respondent’s theory that

a Court has absolute, diseretion in awarding damages: for

copyright infringement. In every oné of those: cases the

the ‘tin lieu” elause simply was not applicable,

bear ao nt’s uel of -W ashingtonian Pub, Con,

tue. v. Pearson, Dy. C. y 140 BF. (2d) 465 (1944)

that ie Court eear avaiged profits in its Mecstiies

contradicts the express language. of the decision wherein

the Court said (at p. 466) the ‘in liew’’ clause was **not

applicable’? because profits had been. proved. It is to be

noted, also, ‘that as to. defendants, Pearson and Allen, the

award’ of profit ounted to $15.46, considerably less

than the minim of: $250 which respondent claims a.

' Court is réquined to award w henever infringement/is found

(Res, Br. p. 41).

Moreover, in that: case, plaintiff Sought both damages

and protits and the ( ourt, in awarding profits, refused to:

award dainages on the ground that the “in lieu’’ clause is

not intended asa penalty. Contrast this: with the award

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of both profits and statutory damages by the Court of

Appeals in the instant ease. ee :

: Respondent's statement on, Universal Pictures Co. ve

Harald Lloyd Corp., 9 Cir 162 F- (2d) 354 (1947) is not

corréet. Therein the plaintiff sought to recover both.

actual damages and actual profits, but,-in the alternative,

asked for an: award of statutory damages, the maxinium

amount of which was not limited under the statute to

$5,000 Since the infringement had oeéurred after actual

notice to-defendant (ef, ‘respondent’s statement at pp.

47-8 of. its brief). In refusing to ‘award statutory damages,

the Court also held that a plaintiff in a copyright case is

“not entitled to both damages and profits (contrary to the

holding of. the Court of Appeals in this case), but to one

or the other? whichever is greater, Soh lia REIT

The award of actual profits of $100 in Malsed v.

Marshall Fieid Co, % FL Supp. 372 (U.S. D.C, W.D.

Wash. .N.D., 1901) was not made in the \diseretion of the

Distriet Court Judge (ef. Res, Br. p. 49).. In that case,

the Court clearly stated that the “in lieu”? clause ‘‘does

not apply whete either actual damages .or profits are

ascertainable”, The Malsed ease was recently approved

in Advertisers Lithange, Tne. v Hinkley, 8 Cir., 95 U.S. -

P.Q. 124 (Oct. 21, °1952; not officially reported).. In the

latter case statutory damates of $312 were awarded since

the copyright proprietor made no proof of actual damages -

or profits om account of the infringement. At page 126, :

the Court of Appeals for the Kighth Cireuit said:

‘The ‘in lieu’ provision of the statute is not to

_aecomplish the imposition of &- penalty as has been

assaved here, but is” an ‘Wjuitable substitute for

-eases Which present difficulty. or: impossibility -of.

proof as to damages snd proftits’.’’ (citing Malsed

Vv. Marshall Field Co., supra.) x

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Respondent Inikes no effort. to distinguish Davilla v:

Briunsw icke-Balke ‘Collender- PS 2 Cir, 94 F. (2d) 567.

(1958), cert. den. 304°U: S. 72, but urges that it. is

‘clearly wrong’? and contrary to the decision in the

Douglas v- Cunningham case, supra, en the theory that a:

. Court awarding statutory damages according to the statu-

_ tory ss and within the fixed limitations “of the

statute, cannot be reversed on appeal, This theory

requires the assumption that’a Court may award statu-

tory damages even’ when ‘actual profits or damages are

proved. eg Ce eee

The Dav ila. ase squarely’ holds that where profits. are

proved—in that case, as in this, by sales—the Court. is

| precluded froin awarding statutory damages and to’ do

so is to use the statuté as a punishment. Furthermore, .

the statute $tself states that in proving profits, the plaintiff —

shall be required ‘to’ prove sales only; and a is no

requ! trennent, us respondent insists (Res. Br. p. 49) that

the amount of sales must always be proved dey serve as:

the basis for diwarding statutory damages at the rate of

*! per infringing ‘copy’’.. As has been pointed out previ-

ae the Court has absolute diseretion in employing the

statutory schedule. Ce ee

pont Mm /

Much of the respondent’s hiief consists of irrelevant

and prejudicial matter.

A substantial part of: respondent's brief consists of

matter. not Televant ‘‘to the: question presented by the

appli¢ation of Section 101(b) of Title 17-of the U. S. Code

to this case’’. ° Abso, it is replete with the type of pre-

Judicial and unjustifiable remarks which have characte T-

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ized respondent's presentation herein throughout and

wen the Court of Appeals characterized as being

‘prompted perhaps by excess of zeal’’ (R. 279).

The issue of infringement is not before this Court under

the order allowing certiorari (R. 281). - — to petitioner eG

regret, | !

Nor are we concerned here with such matters as (x)

the validity of a copyright registered” by Moyer, not in

-litigation (Res. Br. pp. 5- 6); (b) the Copyright Act of.

England and all ‘of its historical antecedents or decisions

thereunder (Res. Br. pp: 18-24); or (6) the C ‘opyright. Acts

of. the original. states of this country’ (Res. Br. Dp. 95) ; or

(d) the Federal Copyright Acts of 1790, 1802, 1819, 1831,

1856 ‘and 1870 or decisions thereunder (Res. Br. pp. -26-

35).

Under Rule 27(d) of this le the ‘*statement of the

ease’? should contain only that “‘which is material to the

eonsideration of the questions presented’’, Respondent’s

statement (Br. pp. 1-7) is largely devoted to a discussion

of the factual sues relating to the ye alia sea

Which petitioner did not brief (Pet. Br. p. 5). Where

certainly is no excuse ‘or ‘evidentiary basis for statements

in respondent’ s brief that petitioner’s alleged ‘infringe-

ment was deliberate, willful, tainted with perjury and

fraud (Res, Br. pp. 9, 10, 44. 51)—partieularly in light

of its admission Gn the trial that petitioner was an ‘‘inno- -

cent bystander”’,

_ Sufficient here to say; in brief reply to such discussion

and attaeks, there was no proof that Woolworth (or

Sahin). committed any deliberate or willful infringement;

and neither dealt in the accused article after notice and the

original. transaction. (R.: 74, 123. 255-6). Also, there was

no actual heads that the Woolworth dog statuette’ was

copied, directly.’ v indirectly, from respondent's copy:

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righted work of art or any one of _respondent’s—several

diverse ‘models, Infringement was deduced and rested by

the District Court solely on ‘claimed similarities (disre-'

garding dissimilarities) between the Woolwerth statuette

~arid some one or another: of respondent’s diverse models,

each said to “embody”? the unproved copyrighted work of

art. And it was only bheeause of the erroneons, highly

v

technical and extremely inequitable ruling of the hostile

trial court, made without ‘ giving any reasons’? (R. 238.

40, 231-3), that petitioner was prevented from presenting,

through a highly qualified expert on materials, very defi-

nite and scientific evidence (fully confirming and corrobor-

ating the verity of Moyer’s testimony) that Defendant’s

‘Exhibit F, of which the Woolworth-statuette Was an actual

and direct copy ‘(as the Court of Appeals wrecognized—R,

274), was authentic and produced in 1938, the vear date

imprinted: in it. This was four years: before plaintiff ’s

assignor produced or obtained the copyright on the work

of art ‘alleged to- have been infringed, Furthermore, the

trial court, jn making: this ruling, recognized that the °

excluded evidence would, prove that the east from which

defendant’s statuette was made “was manufactured back.

in 1938’’ (R. 235). Thus. was the search for the truth

frustrated... It is regrettable too, we believe, hat: the

Court of Appeals approved this ruling on the narrow and

extremely technical. ground that defendant ‘gambled on a -

favorable discretionary ruling by the court?’ and “lost”?

(R. 275), despite the fact that the trial court theretofore

had left. the case open for rebuttal by both parties, had

assured defendant of equal treatment with. plaintiff in.

respect of such rebuttal evidence (R. 181) and thus, pre-

_Sumably, had eliminated any element of chanée inherent-

in the exercise of discretion, : foe

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We cannot and do not argue those points here, but

_ merely mention them to indicate the lack’ of fairness in

respondent’s characterization of petitioner’s acts.

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’ CONCLUSION. °

We respectfully submit that under the correct apph-

“cation of Section 101(b) of the Copyright Act to the

facts of this case, there, was no legal justification for

the award by the District Court of statutory damages

‘or for the award by the Court of Appeals of. statutory

damages plus profits, and that respondent’s recovery

should have been limited, in any event, to the amount

of petitioner’s profits. — | =

For the reasons stated herein and in petitioner’s

main brief, the judgment of the Court of Appeals

’ should be reversed.

Respectfully submitted,

. Manxtin «A. ScHEnck,

, KennetH W. ( iREENAWALT,

Attorneys for Petitioners,

3 One Wall Street, |

“New York 5, New York.

Joun H. Barper,

Of Counsel,

he