Richard N. Bell v. Cameron Taylor , 827 F.3d 699 ( 2016 )


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  •                                    In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________________
    Nos. 15-2343, 15-3735, 15-3731
    RICHARD BELL,
    Plaintiff-Appellant,
    v.
    CAMERON TAYLOR, et al.,
    Defendants-Appellees.
    ____________________
    Appeals from the United States District Court for the
    Southern District of Indiana, Indianapolis Division.
    Nos. 1:14-cv-0785, 1:13-cv-0798, — Tanya W. Pratt, Judge.
    ____________________
    ARGUED MAY 20, 2016 — DECIDED JULY 1, 2016
    ____________________
    Before FLAUM and MANION, Circuit Judges, and ALONSO,
    District Judge. ∗
    FLAUM, Circuit Judge. Richard Bell sued several defendants
    for copyright infringement, alleging that they impermissibly
    displayed a photo belonging to Bell on websites promoting
    ∗ The Honorable Jorge L. Alonso, United States District Court for the
    Northern District of Illinois, sitting by designation.
    2                                Nos. 15-2343, 15-3735, 15-3731
    their respective businesses. Bell sought damages as well as in-
    junctive and declaratory relief in federal district court. The
    district court granted summary judgment for defendants, first
    on damages and later on injunctive and declaratory relief. Bell
    also filed a second copyright infringement lawsuit against
    some of the defendants in the same court. The district court
    granted defendants’ motion to dismiss the second case based
    on res judicata. Bell appeals the grant of summary judgment
    for defendants in the first case and the grant of defendants’
    motion to dismiss in the second case. For the reasons that fol-
    low, we affirm the judgment of the district court in both cases.
    I. Background
    Plaintiff Bell is the undisputed owner of the photograph at
    the center of this appeal, which depicts the Indianapolis sky-
    line during the day (“the daytime photo”). Bell took the photo
    in March 2000, published it online in August 2000, and later
    registered the copyright, which became effective in August
    2011. Bell sued defendants (as well as others who are no
    longer parties to this matter) on June 7, 2011, alleging federal
    copyright infringement and state law claims for conversion,
    misrepresentation, and unfair competition. After Bell
    amended his complaint three times, the district court severed
    the claims and grouped like defendants together. The case
    against the defendants described below commenced on May
    15, 2013 (“the 2013 Case”).
    Defendant Cameron Taylor operates a computer business,
    Taylor Computer Solutions, which he advertises on his web-
    site (www.taylorcomputersolutions.com). Bell alleged in his
    complaint that Taylor and Taylor Computer Solutions (collec-
    tively “Taylor”) used the daytime photo without authoriza-
    tion between January 2009 and April 2011. However, Bell later
    Nos. 15-2343, 15-3735, 15-3731                                3
    realized that Taylor never downloaded or displayed the day-
    time photo specified in the complaint; rather, Taylor’s website
    displayed a different photo that Bell owned—one depicting
    Indianapolis’s skyline at night (“the nighttime photo”). To cor-
    rect his error, Bell sought to amend his complaint a fourth
    time on March 12, 2014—nearly eight months after the July
    15, 2013 deadline for filing motions for leave to amend the
    pleadings. The district court denied his motion, citing undue
    delay and Bell’s carelessness.
    Defendant Fred O’Brien and his business, Insurance Con-
    cepts, operated a website for six to eight weeks in 2011. Bell
    alleged that this website displayed the daytime photo without
    authorization. The website had little to no traffic and gener-
    ated no business, which led O’Brien to shut the website down
    in mid-2011.
    Defendant Shanna Cheatham is a real estate agent who ad-
    vertised her services on her website. Bell alleges that
    Cheatham’s website infringed on his copyright of the daytime
    photo from June 2008 and June 2011. Cheatham’s website was
    designed by Jessica Wilch, who downloaded the daytime
    photo from an unspecified website. Cheatham removed the
    photo on June 15, 2011, immediately after she was contacted
    by Bell. Cheatham has since changed employment and shut
    the website down.
    During discovery, Bell moved to compel the production of
    defendants’ tax returns for every year from 2000 to 2011. Bell
    hoped the tax returns would show an increase in defendants’
    profits during the periods of infringement, thus helping him
    prove his entitlement to indirect profits as damages. Bell also
    moved to compel the production of a spreadsheet created by
    Wilch showing Cheatham’s website traffic before, during, and
    4                                     Nos. 15-2343, 15-3735, 15-3731
    after infringement, along with Wilch’s accompanying notes.
    The district court denied both motions. 1
    On August 26, 2014, the district court granted defendants’
    motion for summary judgment on the issue of damages and
    dismissed Bell’s case with prejudice. The district court found
    that Taylor was entitled to summary judgment because Taylor
    never displayed the daytime photo as Bell alleged in his com-
    plaint. As for the other defendants, the court concluded that
    although Bell had established ownership of the photo, he had
    failed to prove damages: Bell had not demonstrated the
    photo’s fair market value, nor had he shown that defendants
    profited from their use of his photo. Finally, the district court
    found that Bell’s state law claims for conversion, misrepresen-
    tation, and unfair competition were preempted by federal
    copyright law.
    That same day, the district court purported to enter a “fi-
    nal judgment” in favor of defendants. Bell appealed, and on
    June 29, 2015, we dismissed the appeal for lack of jurisdiction
    and remanded the case to the district court. Bell v. Taylor, 
    791 F.3d 745
    , 746 (7th Cir. 2015). We explained that since the dis-
    trict court had not resolved Bell’s claims for injunctive relief,
    the judgment was not final for purposes of appeal. 
    Id. On re-
    mand, both parties moved for summary judgment on injunc-
    tive and declaratory relief. The district court granted sum-
    mary judgment in favor of defendants and entered final judg-
    ment on December 4, 2015.
    1 The district court referred Bell’s motion to compel defendants’ tax
    returns to the Honorable Denise K. LaRue, United States Magistrate Judge
    for the Southern District of Indiana, who denied the motion. The district
    court affirmed the magistrate judge’s decision.
    Nos. 15-2343, 15-3735, 15-3731                                 5
    On April 7, 2014, while Bell’s motion to file a fourth
    amended complaint was pending, Bell initiated a second law-
    suit against Taylor (“the 2014 Case”), asserting the same cop-
    yright infringement and state law claims as the 2013 Case, but
    based on the photo Taylor actually posted: the nighttime
    photo. On June 12, 2015, the district court granted Taylor’s
    motion to dismiss the 2014 Case based on res judicata. Follow-
    ing the remand of the 2013 Case, Bell moved to amend judg-
    ment of the 2014 Case, arguing that res judicata has been mis-
    applied because there was no prior final judgment. The dis-
    trict court denied this motion on December 8, 2015.
    Bell appeals, challenging the grant of summary judgment
    for defendants in the 2013 Case, the grant of defendants’ mo-
    tion to dismiss the 2014 Case based on res judicata, and the
    denial of various motions.
    II. Discussion
    A. Taylor and Taylor Solutions
    We begin our analysis with a discussion of defendants
    Taylor and Taylor Solutions (collectively “Taylor”). Bell ar-
    gues that the district court erred by granting summary judg-
    ment for Taylor in the 2013 Case, denying Bell’s motion for
    leave to amend his complaint a fourth time, and dismissing
    the 2014 Case against Taylor based on res judicata.
    1. Summary Judgment
    We review de novo the district court’s grant of summary
    judgment, construing all facts in the light most favorable to
    Bell, the nonmoving party, and drawing all reasonable infer-
    ences in Bell’s favor. Williams v. Brooks, 
    809 F.3d 936
    , 941 (7th
    6                                 Nos. 15-2343, 15-3735, 15-3731
    Cir. 2016). Summary judgment is proper when there is no gen-
    uine dispute of material fact and the movant is entitled to
    judgment as a matter of law. Fed. R. Civ. P. 56(a).
    In the 2013 Case, Bell’s third amended complaint accused
    Taylor of infringing on his copyright of the daytime photo.
    Taylor answered the complaint and denied posting the day-
    time photo on his website. The district court granted sum-
    mary judgment for Taylor, stating that “Bell admits that [Tay-
    lor] did not use or infringe upon the copyright of the [day-
    time] Photo,” as alleged in the complaint. As explained above,
    Taylor had posted Bell’s nighttime photo, not the daytime
    photo. On appeal, Bell argues that Taylor should have notified
    him that he identified the wrong photo in his complaint. Bell
    contends that Taylor did not comply with Federal Rule of
    Civil Procedure 8(b), which states that “[i]n responding to a
    pleading, a party must … state in short and plain terms its
    defenses to each claim asserted against it[.]” Bell attempts to
    construe Taylor’s argument that he never infringed on Bell’s
    copyright of the daytime photo as an affirmative defense, and
    therefore contends that Taylor waived this “wrong photo de-
    fense” by not pleading it in his answer.
    Bell misunderstands both the definition of “affirmative
    defense” and a defendant’s obligations at the pleading stage
    of civil litigation. While Rule 8(c) directs parties to raise af-
    firmative defenses in the pleadings, Taylor did not assert an
    affirmative defense. An affirmative defense “limits or excuses
    a defendant’s liability even if the plaintiff establishes a prima
    facie case.” Tober v. Graco Children’s Prods., Inc., 
    431 F.3d 572
    ,
    579 n.9 (7th Cir. 2005). In other words, an affirmative defense
    is “[a] defendant’s assertion of facts and arguments that, if
    Nos. 15-2343, 15-3735, 15-3731                                     7
    true, will defeat the plaintiff’s … claim, even if all the allega-
    tions in the complaint are true.” Defense, BLACK’S LAW
    DICTIONARY (10th ed. 2014); see also Philadelphia Indem. Ins. Co.
    v. Chicago Title Ins. Co., 
    771 F.3d 391
    , 401 (7th Cir. 2014). In this
    case, Bell did not establish a prima facie case against Taylor,
    and Taylor’s answer did not assume that the allegations of
    Bell’s complaint were true. Rather, Taylor stated in his answer
    that he did not do what Bell accuses him of doing. This is not
    an affirmative defense but simply a denial of Bell’s allegations.
    Additionally, Taylor fulfilled his duties under Rule 8(b) by
    stating that he never used the photo alleged in the complaint.
    We have explained that “[t]he purpose of a responsive plead-
    ing is to put everyone on notice of what the defendant admits
    and what [he] intends to contest.” Edelman v. Belco Title & Es-
    crow, LLC, 
    754 F.3d 389
    , 395 (7th Cir. 2014). Here, Taylor gave
    Bell adequate notice that he had not used the daytime photo.
    Taylor was not required to do more to inform Bell of his own
    error. Cf. Bell v. Lantz, No. 15-2341, 
    2016 WL 3361557
    , at *2 (7th
    Cir. June 17, 2016) (noting in one of Bell’s other copyright in-
    fringement suits that “Bell’s argument [that the defendant was
    obligated to do more than deny Bell’s allegations in his answer
    to inform Bell that he had sued the wrong defendant] comes
    very close in this case to imposing an affirmative burden on
    the defendant to disprove plaintiff’s case—an argument
    which lacks any support in precedent.”). Therefore, we affirm
    the district court’s grant of summary judgment in Taylor’s fa-
    vor.
    2. Motion For Leave to File a Fourth Amended Complaint
    Next, Bell argues that the district court erred by not grant-
    ing him leave to amend his complaint several months after the
    deadline for amending pleadings. We review the denial of a
    8                                 Nos. 15-2343, 15-3735, 15-3731
    motion for leave to amend for an abuse of discretion. Runnion
    ex rel. Runnion v. Girl Scouts of Greater Chicago & Nw. Indiana,
    
    786 F.3d 510
    , 524 (7th Cir. 2015). Under Federal Rule of Civil
    Procedure 15(a)(2), a court should grant leave to amend a
    pleading “when justice so requires.” However, the court
    “need not allow an amendment when there is undue delay
    [or] undue prejudice to the opposing party ….” Bethany Phar-
    macal Co., Inc. v. QVC, Inc., 
    241 F.3d 854
    , 861 (7th Cir. 2001).
    The district court found that Bell was not diligent in dis-
    covering his mistake regarding which photo Taylor had actu-
    ally posted. During discovery in April 2013, Taylor sent Bell a
    copy of the nighttime photo that he had posted and stated in
    his interrogatory answers that he had never used the daytime
    photo. Thus, the district court found that Bell was on notice
    that Taylor had used the nighttime photo, not the daytime
    photo identified in the complaint. Yet Bell failed to act on this
    information until March 12, 2014, well after the July 15, 2013
    deadline for amending pleadings had passed. Further, the
    court pointed out that Bell filed his motion to amend just four
    weeks prior to the dispositive motions deadlines and at the
    close of discovery. Thus, granting Bell’s motion would cause
    further delay and prejudice to defendants by affecting the
    summary judgment schedule and potentially creating a need
    to reopen discovery. For these reasons, the district court de-
    nied Bell’s motion to amend.
    On appeal, Bell argues that there was no undue delay on
    his behalf. He contends that it was Taylor who delayed the
    proceedings by not being forthcoming about why he was
    denying Bell’s allegations. This argument fails because Taylor
    gave Bell adequate notice that he had not used the daytime
    Nos. 15-2343, 15-3735, 15-3731                                           9
    photo 2 and was not required to do more to help Bell correct
    his error. See 
    Edelman, 754 F.3d at 395
    . Thus, we agree with the
    district court that Bell could have moved for leave to amend
    well before the deadline but failed to do so. See Hukic v. Aurora
    Loan Servs., 
    588 F.3d 420
    , 432 (7th Cir. 2009) (affirming district
    court’s denial of plaintiff’s motion for leave to file a second
    amended complaint “late in the game,” in part because plain-
    tiff based his request on information available to plaintiff
    “long before he sought leave to amend”).
    Moreover, we have acknowledged that when a district
    court denies a motion for leave to amend filed after the dead-
    line, “the generous standard in Rule 15(a)(2) for allowing
    amendments ‘is in some tension with’ Rule 16(b)(4), which
    governs scheduling orders and requires a showing of good
    cause to justify modifying time limits.” Adams v. City of Indi-
    anapolis, 
    742 F.3d 720
    , 734 (7th Cir. 2014), cert. denied, 
    135 S. Ct. 286
    (2014) (quoting Alioto v. Town of Lisbon, 
    651 F.3d 715
    , 719
    (7th Cir. 2011)). In this situation, the court is “entitled to apply
    the heightened good-cause standard of Rule 16(b)(4) before
    considering whether the requirements of Rule 15(a)(2) were
    satisfied.” 
    Id. (citation and
    internal quotation marks omitted).
    2  In fact, the record shows that Bell was aware that Taylor posted the
    nighttime photo as early as April 2011, several months before Bell even
    filed this suit. In an April 13, 2011 email, Taylor said to Bell:
    Ok, well I shall take down the photo and then go take my
    own photo of the Indianapolis skyline at night …. As for
    your website I see you have several images of Indianapo-
    lis at night and the same photo listed for sale ….
    (emphasis added).
    10                                Nos. 15-2343, 15-3735, 15-3731
    In Adams, we upheld the denial of a motion for leave to
    amend filed six months after the deadline where the plaintiffs
    had not demonstrated good cause. 
    Id. Similarly, Bell
    has not
    shown good cause for relief from the deadline, which passed
    nearly eight months before his attempt to amend his com-
    plaint a fourth time. Thus, the district court did not abuse its
    discretion in denying Bell’s request to amend his complaint.
    3. Res Judicata
    Bell’s final argument involving Taylor is that the district
    court erred in dismissing Bell’s second lawsuit—the 2014
    Case—against Taylor based on res judicata. We review de
    novo a dismissal based on res judicata. Bonnstetter v. City of
    Chicago, 
    811 F.3d 969
    , 974 (7th Cir. 2016). Res judicata, or claim
    preclusion, bars any claims that were litigated or could have
    been litigated in a previous action when three requirements
    are met: “(1) an identity of the causes of action; (2) an identity
    of the parties or their privies; and (3) a final judgment on the
    merits.” Roboserve, Inc. v. Kato Kagaku Co., Ltd., 
    121 F.3d 1027
    ,
    1034 (7th Cir. 1997) (internal citation and quotation marks
    omitted).
    We agree with the district court that all of the require-
    ments for res judicata are present in this case. There is an iden-
    tity of the causes of action because Bell’s two lawsuits against
    Taylor arise out of “a common core of operative facts”—
    namely, Taylor’s use of the nighttime photo, which Bell mis-
    takenly identified as the daytime photo. 
    Id. (internal quota-
    tion marks omitted); see also Czarniecki v. City of Chicago, 
    633 F.3d 545
    , 550 (7th Cir. 2011) (“Two claims are one for the pur-
    poses of res judicata if they are based on the same, or nearly
    the same, factual allegations.” (citation and internal quotation
    marks omitted)).
    Nos. 15-2343, 15-3735, 15-3731                                  11
    Bell argues that the 2013 Case did not make any determi-
    nation regarding the nighttime photo and that he did not have
    a full and fair opportunity to litigate the issue of the nighttime
    photo in the 2013 Case. These arguments fail because Bell had
    an opportunity to litigate infringement of the nighttime photo
    in the 2013 Case, but he did not do so. See Highway J Citizens
    Grp. v. U.S. Dep’t of Transp., 
    456 F.3d 734
    , 741 (7th Cir. 2006)
    (“[R]es judicata bars not only those issues which were actually
    decided in a prior suit, but also all issues which could have
    been raised in that action.” (citation and internal quotation
    marks omitted)). Bell attempted to amend his complaint to in-
    clude the nighttime photo, but the district court appropriately
    denied this motion for the reasons discussed above. Bell can-
    not use a second lawsuit against Taylor to take another bite at
    the apple. See 
    Roboserve, 121 F.3d at 1035
    (“Once a transaction
    has caused injury, all claims arising from that transaction
    must be brought in one suit or lost.” (citation and internal
    quotation marks omitted)).
    It is undisputed that the parties are the same in the two
    cases, and thus we turn to the third res judicata requirement
    of finality. Bell argues that the judgment in the 2013 Case was
    not final when the district court invoked res judicata in the
    2014 Case. Bell correctly points out that in Bell’s initial appeal,
    we held that the district court’s first summary judgment rul-
    ing was not final for purposes of appeal because the district
    court had only ruled on damages and had not yet ruled on
    injunctive and declaratory relief. Bell v. Taylor, 
    791 F.3d 745
    ,
    746 (7th Cir. 2015). However, our holding in Bell’s first appeal
    is not dispositive, as finality for purposes of appeal is not the
    same as finality for purposes of preclusion. See 18A CHARLES
    ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE &
    PROCEDURE § 4432 (2d ed. 2016).
    12                                 Nos. 15-2343, 15-3735, 15-3731
    This Circuit has adopted the Second Circuit’s relaxed con-
    cept of finality, at least for purposes of collateral estoppel, or
    issue preclusion. See Miller Brewing Co. v. Joseph Schlitz Brewing
    Co., 
    605 F.2d 990
    , 996 (7th Cir. 1979), cert. denied, 
    444 U.S. 1102
    (1980) (“To be ‘final’ for purposes of collateral estoppel the de-
    cision need only be immune, as a practical matter, to reversal
    or amendment. ‘Finality’ in the sense of [the finality required
    for appellate jurisdiction] is not required.”); Lummus Co. v.
    Commonwealth Oil Ref. Co., 
    297 F.2d 80
    , 89 (2d Cir. 1961), cert.
    denied, 
    368 U.S. 986
    (1962) (“Whether a judgment, not ‘final’ in
    the sense of [finality for appeal under] 28 U.S.C. § 1291, ought
    nevertheless be considered ‘final’ in the sense of precluding
    further litigation of the same issue, turns upon such factors as
    the nature of the decision (i.e., that it was not avowedly tenta-
    tive), the adequacy of the hearing, and the opportunity for re-
    view.”). Accordingly, we have held that a judgment can have
    the requisite finality for res judicata purposes even if it is not
    final for purposes of appeal. See Alexander v. Chicago Park Dist.,
    
    773 F.2d 850
    , 855 (7th Cir. 1985). However, as we acknowl-
    edged in EEOC v. Harris Chernin, Inc., there is tension in our
    case law regarding whether this relaxed concept of finality
    should in fact be extended to res judicata or if it should be
    limited to collateral estoppel. 
    10 F.3d 1286
    , 1290 n.5 (7th Cir.
    1993); see also WRIGHT & MILLER § 4434 n.29.
    In the case at hand, the district court’s grant of summary
    judgment for Taylor in the 2013 Case was final for purposes
    of res judicata. Although the district court applied res judicata
    before it ruled on injunctive and declaratory relief as to the
    other defendants, the district court’s rulings pertaining to Tay-
    lor were final. There were no remaining claims against Taylor
    after the district court issued its first summary judgment
    Nos. 15-2343, 15-3735, 15-3731                                              13
    opinion. And the court’s grant of summary judgment for Tay-
    lor was in no way affected by the court’s later rulings on in-
    junctive and declaratory relief as to the other defendants.
    Further, our decision to affirm the district court on this is-
    sue aligns with the goals of res judicata. We have explained
    that res judicata “promotes predictability in the judicial pro-
    cess, preserves the limited resources of the judiciary, and pro-
    tects litigants from the expense and disruption of being haled
    into court repeatedly.” Palka v. City of Chicago, 
    662 F.3d 428
    ,
    437 (7th Cir. 2011). After Bell’s initial appeal, he raised the
    same arguments against res judicata before the district court
    in a motion to amend judgment of the 2014 Case, and the dis-
    trict court appropriately denied his motion. The court ex-
    plained that it had ruled on all claims and properly entered
    final judgment in the 2013 Case and that its grant of summary
    judgment for Taylor remained unchanged. 3 Thus, the district
    court found that allowing Bell to take advantage of the district
    court’s initial oversight in entering final judgment before rul-
    ing on injunctive and declaratory relief would be unfairly
    prejudicial to Taylor, especially because the oversight had
    since been addressed.
    We agree. Reversing the district court’s dismissal of the
    2014 Case would have no practical effect. It is undisputed that
    at this point, the district court has entered final judgment for
    defendants. Thus, even if we were to remand the 2014 Case to
    the district court, the court could simply reissue the same
    opinion dismissing the 2014 Case based on res judicata. We
    3 The district court denied Bell’s motion on December 8, 2015, four
    days after the district court ruled on Bell’s claims for injunctive and declar-
    atory relief and entered final judgment for defendants.
    14                                 Nos. 15-2343, 15-3735, 15-3731
    decline Bell’s suggestion that we should use the limited re-
    sources of the judiciary in this manner. Therefore, we affirm
    the district court’s dismissal of the 2014 Case.
    B. O’Brien, Insurance Concepts, and Cheatham
    Turning to the remaining defendants, Bell argues that the
    district court erred by granting summary judgment for
    O’Brien, Insurance Concepts, and Cheatham on the issue of
    damages; denying Bell’s motion to compel discovery of de-
    fendants’ tax returns and the spreadsheet of Cheatham’s web-
    site traffic; and denying Bell’s request for declaratory relief.
    1. Damages
    The district court found that Bell established ownership of
    the copyright of the daytime photo and that O’Brien, Insur-
    ance Concepts, and Cheatham had infringed on Bell’s copy-
    right by displaying the photo on their respective websites. See
    JCW Invs., Inc. v. Novelty, Inc., 
    482 F.3d 910
    , 914 (7th Cir. 2007)
    (“To establish copyright infringement, one must prove two el-
    ements: ‘(1) ownership of a valid copyright, and (2) copying
    of constituent elements of the work that are original.’” (quot-
    ing Feist Publ’ns, Inc. v. Rural Tel. Servs. Co., 499 US. 340, 361
    (1991))). Nonetheless, the district court concluded that Bell
    could not prove damages.
    “The Copyright Act permits a copyright owner to recover
    actual damages suffered as a result of the infringing activity
    and any profits of the infringer resulting from the infringe-
    ment that are not otherwise taken into account in calculating
    actual damages.” McRoberts Software, Inc. v. Media 100, Inc.,
    
    329 F.3d 557
    , 566 (7th Cir. 2003). Actual damages are “usually
    determined by the loss in the fair market value of the copy-
    right, measured by the profits lost due to the infringement or
    Nos. 15-2343, 15-3735, 15-3731                                 15
    by the value of the use of the copyrighted work to the in-
    fringer.” 
    Id. We have
    said that “[i]t is not improper for a jury
    to consider either a hypothetical lost license fee or the value
    of the infringing use to the infringer to determine actual dam-
    ages, provided the amount is not based on ‘undue specula-
    tion.’” 
    Id. (quoting On
    Davis v. The Gap, Inc., 
    246 F.3d 152
    , 166
    (2d Cir. 2001)).
    Bell attempts to prove damages by establishing the fair
    market value of the daytime photo, as demonstrated by the
    licensing fee defendants should have paid Bell for use of the
    photo. To prove the value of the hypothetical license fee, Bell
    submitted an affidavit stating:
    Plaintiff has sold for several years and currently
    sells the perpetual commercial rights to display
    digital download version [sic] of all his photos
    … for use on the web for $200.
    …
    Plaintiff believes that the price of $200 is fair and
    reasonable and represents the fair market value
    for the perpetual commercial rights to publish
    the photos.
    Additionally, Bell cited as evidence of damages a webpage
    showing that the advertised price for a license to download
    the daytime photo is $200. The district court deemed Bell’s af-
    fidavit insufficient to establish fair market value, stating:
    “[T]here is no evidence other than Mr. Bell’s unsupported as-
    sertion that he has sold the rights to the Indianapolis Photo
    for years at a price of $200.00. Without any support or evi-
    dence, this value is based on undue speculation.”
    16                                      Nos. 15-2343, 15-3735, 15-3731
    On appeal, Bell argues that summary judgment was im-
    proper because his affidavit and website price listing create a
    genuine dispute of material fact as to whether he suffered
    damages from the infringement. He contends that the district
    court erred by making a credibility determination when it
    characterized Bell’s affidavit as an “unsupported assertion.”
    Bell’s argument fails for several reasons. Bell does not aver
    in his affidavit that he has ever actually had a buyer willing
    to pay $200 for his photo. Instead, he states that he “believes
    that the price of $200 is fair and reasonable and represents the
    fair market value ….” Without additional evidence, Bell’s sub-
    jective belief as to the fair market value of his photo is not
    enough to prove damages. See On 
    Davis, 246 F.3d at 166
    (“The
    question is not what the owner would have charged, but ra-
    ther what is the fair market value.”).
    Likewise, the price that Bell listed on his website is not suf-
    ficiently concrete to show the fair market value of his photo.
    See Dash v. Mayweather, 
    731 F.3d 303
    , 318 (4th Cir. 2013) (“To
    survive summary judgment of an actual damages claim, a
    copyright holder must show that the thing taken had a fair
    market value. Evidence of the owner’s prior sale or licensing
    of copyrighted work will satisfy this burden when it is suffi-
    ciently concrete.” (internal citations and quotation marks
    omitted)). Despite the fact that the district court granted de-
    fendants’ motion to compel Bell’s sales records, Bell never pro-
    duced any evidence supporting his assertion that he has sold
    the photo for $200. 4
    4 In fact, Bell attempted to obfuscate the issue of damages by objecting
    to defendants’ motion to compel his sales records, arguing that the sales
    records were not relevant and that his financial records were confidential,
    Nos. 15-2343, 15-3735, 15-3731                                          17
    Finally, Bell argues that defendants did not present any ev-
    idence contradicting Bell’s affidavit or price listing. However,
    it was Bell’s burden to prove damages, and defendants were
    not required to produce any evidence showing a lack of dam-
    ages. See McRoberts 
    Software, 329 F.3d at 568
    . Thus, the district
    court did not err in granting summary judgment for O’Brien,
    Insurance Concepts, and Cheatham on the issue of damages.
    2. Motion to Compel Discovery
    Next, Bell argues that the district court erred in denying
    his motions to compel discovery of defendants’ tax returns
    and the spreadsheet of Cheatham’s website traffic. We review
    the district court’s denial of a motion to compel for an abuse
    of discretion. e360 Insight, Inc. v. Spamhaus Project, 
    658 F.3d 637
    , 644 (7th Cir. 2011).
    The Copyright Act permits a plaintiff to recover an in-
    fringer’s profits that are “attributable to the infringement ….”
    17 U.S.C. § 504(b). The Act specifies that “[i]n establishing the
    infringer’s profits, the copyright owner is required to present
    proof only of the infringer’s gross revenue, and the infringer
    is required to prove his or her deductible expenses and the
    elements of profit attributable to factors other than the copy-
    righted work.” 
    Id. In other
    words, a plaintiff must show a
    causal nexus between the infringement and the gross reve-
    nues. See Taylor v. Meirick, 
    712 F.2d 1112
    , 1122 (7th Cir. 1983)
    (“If General Motors were to steal your copyright and put it in
    a sales brochure, you could not just put a copy of General Mo-
    tors’ corporate income tax return in the record and rest your
    voluminous, and burdensome to produce. After the district court granted
    defendants’ motion to compel, Bell still did not produce any sales records;
    rather, he moved for a protective order, which the district court denied.
    18                                 Nos. 15-2343, 15-3735, 15-3731
    case for an award of infringer’s profits.”); Polar Bear Prods., Inc.
    v. Timex Corp., 
    384 F.3d 700
    , 711 (9th Cir. 2004) (“[T]he copy-
    right claimant must first show a causal nexus between the in-
    fringement and the gross revenue ….”).
    The district court agreed with the magistrate judge who
    denied Bell’s motion to compel defendants’ tax returns, find-
    ing that the request for eleven years of tax returns was over-
    broad and that Bell’s assertion that the tax returns would es-
    tablish wrongful profits was “nothing more than a bare alle-
    gation.” The court reasoned that even if the tax returns
    showed an increase in profits during the time the photo ap-
    peared on the defendants’ websites, Bell could not establish a
    nexus between the increased profits and the use of his photo.
    The district court also denied Bell’s motion to compel discov-
    ery of Cheatham’s spreadsheet of website traffic.
    On appeal, Bell focuses on Cheatham’s tax returns and the
    spreadsheet related to her website traffic, since O’Brien and
    his Insurance Concepts website generated no business. Bell
    alleges that “there is significant evidence in the record that
    creates a substantial likelihood that Bell would establish a
    causal nexus.”
    However, Bell does not develop his argument to demon-
    strate how the tax returns would allow him to develop a
    causal nexus, even if they did reflect an increase in profits dur-
    ing the period of infringement. Cheatham used Bell’s daytime
    photo of the Indianapolis skyline on her website advertising
    her services as a real estate agent. There is no evidence sug-
    gesting that Cheatham attracted more clients because of Bell’s
    photo. See Eagle Servs. Corp. v. H2O Indus. Servs., Inc., 
    532 F.3d 620
    , 623 (7th Cir. 2008) (“It is doubtful that profits from the
    sale of noninfringing goods or services … can be attributed to
    Nos. 15-2343, 15-3735, 15-3731                                 19
    a copyright infringement with enough confidence to support
    a judgment.”); cf. Frank Music Corp. v. Metro-Goldwyn-Mayer,
    Inc., 
    772 F.2d 505
    , 517 (9th Cir. 1985) (causal nexus between
    profits and infringement demonstrated by casino’s annual re-
    port stating that the operations of the casino were “materially
    enhanced” by the popularity of the infringing stage show (in-
    ternal quotation marks omitted)). Thus, the district court did
    not abuse its discretion in denying Bell’s motion to compel de-
    fendants’ tax returns.
    Nor did the district court abuse its discretion in denying
    Bell’s motion to compel the spreadsheet of Cheatham’s web-
    site traffic. As the district court acknowledged, Cheatham had
    already provided Bell with documents showing the same in-
    formation contained in the spreadsheet—specifically, sev-
    enty-two monthly web reports for Cheatham’s website, en-
    compassing pre- and post-infringement periods. Thus, the
    spreadsheet would be duplicative. See Fed. R. Civ. P. 26(b)(2)
    (“[T]he court must limit the frequency or extent of discovery
    otherwise allowed … [if] the discovery sought is unreasona-
    bly cumulative or duplicative, or can be obtained from some
    other source that is more convenient, less burdensome, or less
    expensive ….”); Patterson v. Avery Dennison Corp., 
    281 F.3d 676
    , 681 (7th Cir. 2002). For these reasons, we affirm the dis-
    trict court’s denial of Bell’s motions to compel discovery.
    3. Declaratory Relief
    Finally, Bell argues that the district court erred in granting
    summary judgment for defendants on the issue of declaratory
    relief and denying his request for a declaration that he is the
    valid owner of the copyright of the daytime photo. “The De-
    claratory Judgment Act, 28 U.S.C. § 2201, allows federal
    courts, in their discretion, to render declaratory judgments
    20                                Nos. 15-2343, 15-3735, 15-3731
    only where there exists an actual controversy ….” Trippe Mfg.
    Co. v. Am. Power Conversion Corp., 
    46 F.3d 624
    , 627 (7th Cir.
    1995) (citation and internal quotation marks omitted). In de-
    ciding whether there is an actual controversy, we focus on
    whether the facts alleged “show that there is a substantial con-
    troversy, between parties having adverse legal interests, of
    sufficient immediacy and reality to warrant the issuance of a
    declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 
    549 U.S. 118
    , 127 (2007) (citation and internal quotation marks
    omitted).
    The district court found that there was no actual contro-
    versy between Bell and O’Brien, Insurance Concepts, and
    Cheatham since defendants were no longer infringing on
    Bell’s copyright. The court stated, “[t]hese [d]efendants have
    no desire to interact with Bell or use his photographs in the
    future.” The district court also noted that it had already found
    in its first summary judgment opinion that Bell owned the
    copyright.
    We agree with the district court. As the court explained,
    defendants had long since removed Bell’s photo from their
    websites. In fact, the websites no longer exist. Thus, even if a
    controversy had existed at the time Bell filed suit, there is cur-
    rently no actual controversy of “sufficient immediacy and re-
    ality to warrant the issuance of a declaratory judgment.”
    
    MedImmune, 549 U.S. at 127
    . Therefore, the district court did
    not err in granting summary judgment for defendants on the
    issue of declaratory relief.
    III. Conclusion
    For the foregoing reasons, we AFFIRM the judgments of the
    district court.
    

Document Info

Docket Number: 15-2343, 15-3735, 15-3731

Citation Numbers: 827 F.3d 699, 2016 U.S. App. LEXIS 12175

Judges: Flaum, Manion, Alonso

Filed Date: 7/1/2016

Precedential Status: Precedential

Modified Date: 11/5/2024

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