Court Error – Damages

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7^th Circuit Court of Appeals

Case Name: Amy Lee Sullivan, d/b/a Design Kit v. Flora, Inc.,

Case No.: 17-2241; 18-2534

Officials: FLAUM, BARRETT, and SCUDDER, Circuit Judges.

Focus: Court Error – Damages

This appeal presents a question of first impression for us on the scope of statutory damages recoverable under the Copyright Act of 1976. Section 504(c)(1) of the Act permits a copyright holder “to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work,” with Congress separately instructing that, in determining statutory damages, “all the parts of a compilation or derivative work constitute one work.” This case requires us to determine what constitutes “one work” in a fact pattern where a jury found infringement on multiple works registered in a single copyright application.

Amy Sullivan, a graphic design artist, produced a series of 33 illustrations for Flora, Inc., an herbal supplement company, to use in two advertising campaigns. Upon noticing that Flora was using the illustrations in other ads, Sullivan brought suit for copyright infringement and opted to pursue statutory damages. She did so to maximize her potential payout by classifying each of her 33 illustrations as “one work” within the meaning of § 504(c)(1) of the Copyright Act. Flora disagreed, contending that the illustrations were part of two broader compilations and thus, if Sullivan prevailed, § 504(c)(1) limited her to just two statutory damage awards—one award for infringement on the illustrations used in each of the two advertising campaigns. The district court agreed with Sullivan, and instructed the jury that she could recover separate awards of statutory damages for 33 acts of infringement on 33 separate illustrations. The jury found infringement on each of the 33 illustrations and returned a statutory damages award of $3.6 million.

On appeal Flora challenges the district court’s ruling on statutory damages and separate rulings on two additional defenses to liability asserted at trial. While procedural shortcomings defeat these latter two challenges, Flora is right that the district court committed error in permitting separate awards of statutory damages unaccompanied by any finding that each or any of the 33 illustrations constituted “one work” within the meaning and protection of § 504(c)(1) of the Copyright Act. It is neither appropriate nor possible for us to make that finding on the record before us. So we vacate the judgment in Sullivan’s favor and remand for further proceedings.

Affirmed in part. Vacated and remanded in part.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.