Close-Up International, Inc. v. Berov

07-5230-cv
Close-Up Int’l, Inc. v. Berov
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING
A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan Courthouse, 500 Pearl Street, in the City of New York, on the 29th
day of June, two thousand ten.
Present:
PETER W. HALL,
DEBRA ANN LIVINGSTON,
Circuit Judges,
*
JOSEPH F. BIANCO,
District Judge.
________________________________________________
CLOSE-UP INTERNATIONAL, INC.,
KINOVIDEOOBYEDINENIE KRUPNY PLAN, and
FEDERAL STATE UNITARY KINOKONTSERN
MOSFILM,
Plaintiffs-Appellees,
v. No. 07-5230-cv
JOSEPH BEROV, RIGMA AMERICA CORPORATION,
Defendants-Appellants,
NATASHA ORLOVA, SAINT PETERSBURG, RUSSIAN
*
Judge Joseph F. Bianco of the United States District Court for the Eastern District of
New York, sitting by designation.
ENTERTAINMENT AND WHOLESALE, INC., and
RUSSIAN DISTRIBUTORS, INC.,
Defendants.
________________________________________________
For Plaintiffs-Appellees: HARVEY SHAPIRO , Sargoy, Stein, Rosen & Shapiro, New York,
N.Y.
For Defendants-Appellants: ADAM RICHARDS, Adam Richards LLC, New York, N.Y.
________________________________________________
Appeal from the United States District Court for the Eastern District of New York
(Trager, J.).
ON CONSIDERATION WHEREOF, it is hereby ORDERED, ADJUDGED, and
DECREED that the judgment of the District Court be and hereby is AFFIRMED.
Defendants-appellants Joseph Berov (“Berov”) and Rigma America Corporation
(“Rigma”) appeal from a judgment of the district court (Trager, J.), entered pursuant to a partial
grant of summary judgment in favor of the plaintiffs with respect to liability and a jury trial with
respect to damages, holding Berov and Rigma jointly and severally liable for copyright and
trademark infringement and awarding $2,504,000.00 in damages and $323,004.88 in attorneys’
fees and costs. The jury’s damages award comprised $1,350,000.00 in statutory damages with
respect to nine registered works that the defendants were found to have willfully infringed and
$1,404,000 in actual damages with respect to 374 non-registered works; the district court later
reduced the overall award by $250,000.00 to reflect the amount paid by the non-appellant
defendants, who settled. We assume the parties’ familiarity with the underlying facts and
procedural history of the case.
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On appeal, the appellants raise three arguments. First, they contend that summary
judgment was granted in error because there is a triable issue with respect to whether a document
known as the “Certificate of Authority” was a new contract extending their license and because
the district court made improper credibility determinations. Second, the appellants argue that the
district court usurped the jury’s role by finding willfulness at the summary judgment stage.
Third, they contend that certain documents introduced as evidence at the damages trial were not
properly authenticated. We consider each of these arguments in turn.
I. Whether summary judgment was properly granted
We review the district court’s grant of summary judgment de novo, applying the same
standards that govern the district court’s consideration of the motion. See Aulicino v. New York
City Dep’t of Homeless Servs., 580 F.3d 73, 79 (2d Cir. 2009). A motion for summary judgment
may properly be granted – and the grant of summary judgment may properly be affirmed – only
where there is no genuine issue of material fact to be tried, and the facts as to which there is no
such issue to warrant the entry of judgment for the moving party as a matter of law. See Fed. R.
Civ. P. 56(c)(2); see, e.g., Jasco Tools, Inc. v. Dana Corp., 574 F.3d 129, 151 (2d Cir. 2009).
The appellants, in challenging summary judgment, must “set forth specific facts showing that
there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
Appellants argue that the Certificate of Authority was a new contract extending their
copyright license, saying “shortly after entering into the 1997 Contract, the parties entered into
another agreement which was negotiated at arms length and which, on its face, changed three key
components of the 1997 Contract. . . . it expanded the term of Rigma’s license for an additional
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two years.” They contend that, under the U.S. Copyright Act, the Certificate of Authority created
a transfer of copyright.
An alleged transfer of copyright is subject to requirements for a valid transfer under
copyright law but is also governed by state contract law. See, e.g., Video Trip Corp. v. Lightning
Video, Inc., 866 F.2d 50, 52 (2d Cir. 1989); see also Bassett v. Mashantucket Pequot Tribe, 204
F.3d 343, 347 (2d Cir. 2000) (noting that state contract law generally governs in situations
“where the defendant held a license to exploit the plaintiff’s copyright, but is alleged to have
forfeited the license by breaching the terms of the licensing contract and thus to infringe in any
further exploitation”); Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115, 1122-23 (9th
Cir. 1999) (citing Video Trip for the proposition that preliminary contractual issues pertaining to
copyright licensing are decided according to state contract law); Nimmer on Copyright
§ 10.08[A] (“[P]rinciples of contract law generally apply to construction of copyright
assignments, licenses, and other transfers of rights[,] [and,] [t]hus, if an assignment does not
contain certain essential terms, it may be held void for indefiniteness.”). Appellants rely upon
New York cases to argue that “whether the certificate of authority altered the terms of the 1997
contract was a material question of fact for the jury.” 1 We have previously explained that
“[u]nder New York law, whether a binding agreement exists is a legal issue, not a factual one,”
1
The cases cited by the appellant include: Lazard Freres & Co. v. Protective Life Ins.
Co., 108 F.3d 1531, 1540 (2d Cir. 1997) (“[I]t remains clear that New York law should
control.”); Krishna v. Colgate Palmolive Co., 7 F.3d 11, 16 (2d Cir. 1993) (“We add, finally,
that if we reached the issue posed by New York law . . . we would nonetheless reverse and
remand. Summary judgment is notoriously inappropriate for determination of claims in which
issues of intent, good faith and other subjective feelings play dominant roles.”) (citations and
internal quotation marks omitted); Leberman v. John Blair & Co., 880 F.2d 1555, 1560 (2d Cir.
1989) (referring to “instant contract” being “governed by New York law”).
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Vacold LLC v. Cerami, 545 F.3d 114, 123 (2d Cir. 2008), and also that “an enforceable contract
requires mutual assent to the essential terms and conditions thereof.” Opals on Ice Lingerie v.
Bodylines Inc., 320 F.3d 362, 372 (2d Cir. 2003).2
At oral argument, appellants contended that “on its face, the certificate is unambiguous.”
On its face, however, the certificate of authority is simply a statement, which can be shown to
third parties to demonstrate that Rigma is a licensee, and which provides a telephone number
third parties can call to confirm Rigma’s authority. The Certificate does not address the
consideration provided by Rigma, the licensing rate, or the obligations of the parties. It does not
show mutual assent to the essential terms of a license. In addition to these omissions, the
Certificate also contains an affirmative reason for summarily rejecting the notion that it is a
contract – the Certificate begins by stating that it is issued “pursuant to the contract in force
between the parties.” It is implausible that a contract replacing an earlier contract would open by
deriving all of its authority from that earlier contract.
Appellants claim that the district court made improper determinations of witness
credibility as the basis for its decision on summary judgment. The court did appear to make a
credibility determination with respect to Joseph Berov. At the hearing on summary judgment,
the judge stated, referring to Berov, “You are talking about a criminal, someone convicted of a
2
Appellees, citing Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82(2d. Cir. 1998), argue on appeal that, under the Berne Convention, Russian copyright law
governs questions of ownership for copyrights in works created by Russian entities and first
published in Russia. In Itar-Tass, however, we made clear that we were not addressing
assignment of rights, stating: “In deciding that the law of the country of origin determines the
ownership of copyright, we consider only initial ownership, and have no occasion to consider
choice of law issues concerning assignments of rights.” Id. at 91 n.11. Because appellants’
arguments against summary judgment fail even under the New York law upon which they rely,
we need not reach appellees’ arguments based on Russian law.
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crime. You would expect me to credit his testimony about anything.” On summary judgment,
courts are not to make judgments of credibility. See Lipton v. The Nature Co., 71 F.3d 464, 471
(2d Cir. 1995).
The mere fact that the district court made a credibility determination, however, does not
necessarily compel reversal. Here, Berov’s affidavit in opposition to summary judgment fails to
provide evidence of mutual assent to all of the essential terms (e.g., the licensing rate) necessary
to make the Certificate of Authority a valid contract extending the license. Thus, even crediting
Berov’s affidavit, the appellants still failed to provide sufficient evidence to allow a finding that
the Certificate of Authority was a valid new licensing contract, and the credibility determination
by the court, even if in error, does not compel reversal. Even if the district court improperly
assigned weight to its observation that Berov was not credible, our own review is de novo, and
we are independently satisfied that the parol evidence rule would have barred extrinsic evidence
regarding the formation of the Certificate in any event, because extrinsic evidence is not
admissible “to vary or contradict the terms of a fully integrated writing.” Topps Co., Inc. v.
Cadbury Stani S.A.I.C., 526 F.3d 63, 69 (2d Cir. 2008). Because we find both the 1997 Contract
and the Certificate of Authority unambiguous – and the latter is unambiguously a badge of
authority, not a contract — Berov was not prejudiced by whatever determination the district court
made with respect to his credibility.
II. Whether the district court improperly determined willfulness
Generally speaking, summary judgment is not a tool well suited to determining
willfulness, especially when it turns on “[d]eterminations of credibility,” which “are within the
province of the jury.” Lipton, 71 F.3d at 472. It is not clear from the summary judgment order
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whether the district court was actually attempting to determine willfulness at the summary
judgment stage; the district court’s order recited the issues on which the plaintiffs had sought
summary judgment, including willfulness, and then ordered that “plaintiffs’ motion for partial
summary judgment on its [sic] claims of defendants’ liability for copyright and trademark
infringement is hereby granted.” What cannot be contested, however, is that the jury actually
determined willfulness. The jury was charged that it had to decide whether or not the
infringement was willful, and the jury did find willful infringement. At no point did the district
court direct the jury to find willfulness or make any comments prejudicial to the jury’s neutral
assessment of willfulness. However peculiar the district court’s reference to willfulness in its
summary judgment order may have been, it had no actual effect on the outcome of the trial or on
the final judgment entered.
For the first time in their reply brief, and at oral argument, appellants recast their
argument to contend that the limitation of evidence regarding the Certificate of Authority during
the damages phase of the case was prejudicial error. The reference to limitation of evidence in
appellants’ opening brief, however, was raised only as support for their argument that the district
judge had improperly usurped the jury’s obligation to determine willfulness based on his
determination of Berov’s credibility. Appellants did not argue that evidentiary error was a
separate basis for reversal. Thus, this issue is not properly before us. See, e.g., McCarthy v.
S.E.C., 406 F.3d 179, 186 (2d Cir. 2005) (“[A]rguments not raised in an appellant's opening
brief, but only in his reply brief, are not properly before an appellate court even when the same
arguments were raised in the trial court.”).
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III. Whether the documents provided by the FBI were properly admitted
There is no merit to appellants’ contention that documents provided by the FBI should
have been excluded, either because they were not authenticated as business records or because
the chain of custody was insufficiently proven. A former employee of Berov authenticated the
contested documents based upon his experience working with Berov, testifying regarding the
format of reports used and Mr. Berov’s signature. The former employee also testified regarding
the chain of custody of the documents, as did plaintiff’s prior counsel. This testimony provided a
sound basis for the trial court to determine that the records had sufficient indicia of
trustworthiness as business records. See Saks Int’l, Inc. v. M/V Export Champion, 817 F.2d
1011, 1013 (2d Cir. 1987). Furthermore, although appellants insist that it was critical that an FBI
agent testify to chain of custody, it is only necessary that “[t]he chain of custody . . . be
established with sufficient completeness to make it improbable that the original item either was
exchanged with another or has been contaminated or tampered with,” and “[s]light deficiencies
in the chain of custody go to the weight of the evidence, not its admissibility.” Weinstein’s
Federal Evidence § 901.03[3].
We have considered all of the appellants’ other arguments and find them to be without
merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, CLERK
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