Erickson Productions, Inc. v. Kraig Kast

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ERICKSON PRODUCTIONS, INC.; No. 15-16801
JIM ERICKSON,
Plaintiffs-Appellees, D.C. No.
5:13-cv-05472-HRL
v.
KRAIG RUDINGER KAST, OPINION
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of California
Howard R. Lloyd, Magistrate Judge, Presiding
Argued and Submitted March 25, 2019
San Francisco, California
Filed April 16, 2019
Before: Sidney R. Thomas, Chief Judge, and Michael Daly
Hawkins and M. Margaret McKeown, Circuit Judges.
Opinion by Judge Hawkins
2 ERICKSON PRODUCTIONS V. KAST
SUMMARY *
Copyright
The panel affirmed in part and reversed in part the
district court’s judgment finding that the defendant
vicariously and contributorily infringed plaintiffs’
copyrighted images by displaying them on his website and
did so willfully.
Defendant hired a website developer to redevelop the
website of his business. Three photos, taken by plaintiffs
and licensed to Wells Fargo Private Bank through plaintiff’s
company, were incorporated into defendant’s website.
The panel vacated the jury’s vicarious liability verdict,
which found that defendant vicariously infringed plaintiff’s
copyright through his employment of the website developer,
the direct infringer. The panel held that to prevail on a
vicarious liability claim, the plaintiff must prove that the
defendant has (1) the right and ability to supervise the
infringing conduct and (2) a direct financial interest in the
infringing activity. The panel held that plaintiffs presented
no evidence that could constitute a direct financial benefit as
a matter of law. Specifically, the website developer’s
avoidance of licensing fees for the photos did not confer a
direct financial benefit on defendant.
The panel affirmed the jury’s contributory liability
verdict and therefore affirmed the judgment. A party
engages in contributory copyright infringement when it
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
ERICKSON PRODUCTIONS V. KAST 3
(1) has knowledge of another’s infringement and (2) either
(a) materially contributes to or (b) induces that infringement.
Reviewing for plain error, the panel held that the district
court did not plainly err in instructing the jury that
“knowledge” for contributory infringement purposes
includes having a “reason to know” of the infringement.
The panel vacated the jury’s willfulness finding and
remanded for a determination of whether defendant’s
infringement was willful on the existing record. A finding
of willfulness requires a showing of recklessness, willful
blindness, or actual knowledge, and merely negligent
conduct is not willful. The panel held that the district court
therefore erred when it instructed the jury that it could find
that defendant’s infringement was willful if he “should have
known” that his acts infringed plaintiffs’ copyright.
COUNSEL
Christopher J. Cariello (argued), Margaret Wheeler-
Frothingham, and Paul M. Fakler, Orrick Herrington &
Sutcliffe LLP, New York, New York, for Defendant-
Appellant.
Kevin P. McCulloch (argued) and Nathaniel A. Kleinman,
New York, New York, for Plaintiffs-Appellees.
4 ERICKSON PRODUCTIONS V. KAST
OPINION
HAWKINS, Senior Circuit Judge:
Defendant-Appellant Kraig Kast (“Kast”) appeals a jury
verdict finding that he vicariously and contributorily
infringed Plaintiffs-Appellees Erickson Productions, Inc.
and Jim Erickson’s (collectively, “Erickson”) copyrighted
images by displaying them on his website and did so
willfully. We vacate the jury’s vicarious liability verdict but
affirm its contributory liability verdict, so we uphold the
judgment against Kast. We vacate the jury’s willfulness
finding and remand for a determination of whether Kast’s
infringement was willful on the existing record.
This opinion addresses Kast’s appeal of the judgment
against him, Case No. 15-16801. The panel will address
Kast’s related appeal of the district court’s amendment of the
judgment against him, Case No. 17-17157, in a separate
memorandum disposition.
FACTS AND PROCEEDINGS BELOW
I. Factual Background
Kast is a California resident who owns and operates
various business entities and websites. One such business is
Atherton Trust, a real estate wealth management company.
In 2010, an opportunity arose for Atherton Trust to be
appointed by the State of California to manage the estates of
disabled persons. Kast thought a revamped website would
enhance Atherton Trust’s prospects; so, he hired a website
developer, Only Websites, to redevelop the site. Among
other things, Kast “agree[d] to provide content and other
material . . . throughout the development process.” Kast’s
ERICKSON PRODUCTIONS V. KAST 5
approval would be required on all work, “including the
design, development and finalization of the website.”
To facilitate development, Kast completed a
questionnaire outlining his goals for the revamped website.
Kast identified Wells Fargo Private Bank (“Wells Fargo”) as
one of Atherton Trust’s competitors and highlighted certain
features of Wells Fargo’s website he found appealing. Kast
also stated in emails that he wanted to mimic Wells Fargo’s
website. Further, Kast noted that he “need[ed] to choose
photos from options” provided by Only Websites.
Kast closely managed the development process. For
instance, after reviewing an early draft of the developmental
website, Kast stated that he “like[d] what [Only Websites
did] with the home page layout.” On the other hand, Kast
wanted the logo “to be warmer like” Wells Fargo’s and the
photos “to be more casual like” Wells Fargo’s. Likewise,
Kast later requested that Only Websites move the placement
of Atherton Trust’s logo and company name.
Eventually, three photos from Wells Fargo’s website—
which were taken by Jim Erickson and licensed to Wells
Fargo through his company, Erickson Productions, Inc.—
were incorporated into Atherton Trust’s developmental
website. 1 Neither Atherton Trust, Kast, nor Only Websites
licensed the photos. Erickson discovered the infringement
via Picscout, a “software that tracks imagery online” by
running nightly internet-wide searches. In July 2011,
Erickson demanded that Atherton Trust “cease and desist
infringing its copyright” and pay damages. Kast promptly
1
Neither the record nor the trial transcript reveals whether Kast
directed Only Websites to include the photos or whether Only Websites
did so unilaterally.
6 ERICKSON PRODUCTIONS V. KAST
directed Only Websites to remove the photos, which was
done the next morning, but refused to pay.
II. Procedural Background
a. The trial and the jury’s verdict against Kast
Erickson filed suit in the Central District of California,
alleging direct, vicarious, and contributory copyright
infringement. 2 Erickson contended that the infringement
was willful, and therefore subject to enhanced damages
under 17 U.S.C. § 504(c)(2).
The case was transferred to the Northern District of
California, where it proceeded to trial by consent before a
magistrate judge.
Two divergent narratives emerged at trial. Erickson
portrayed Kast as an opportunistic, cost-cutting
businessperson who rushed completion of Atherton Trust’s
developmental website in an effort to generate additional
income through state-appointed estate management.
Erickson’s counsel elicited testimony from Kast at trial that
he first became aware that the photos in question were on
Atherton Trust’s website in January 2011, and the photos
remained there until Kast received the July 2011 demand
letter. Erickson claimed that including the unlicensed photos
not only allowed Kast to continue pursuing the business
2
Erickson initially sued Kast in the Southern District of New York,
but his complaint was dismissed for lack of personal jurisdiction. See
Erickson Prods., Inc. v. Atherton Trust, No. 12 Civ. 1693 (PGG), 2013
WL 1163346 (S.D.N.Y. March 20, 2013). Erickson obtained a default
judgment against Only Websites. Order of Default, Erickson Prods.,
No. 1:12-cv-01693-PGG-KNF (S.D.N.Y. Nov. 28, 2012).
ERICKSON PRODUCTIONS V. KAST 7
opportunity he so desired, but also avoided the required
developmental licensing fee.
Kast painted a different picture. He agreed “the Atherton
Trust website included unauthorized copies of [Erickson’s]
photos that were copied from” Wells Fargo’s website. But,
according to Kast, Only Websites copied the photos without
his consent. Kast also pointed to a provision in his contract
with Only Websites, which stated that “Client [Kast] is
responsible for obtaining copyright releases and licenses on
all photographs it sends to Provider. Limit of 2 photographs
provided by Provider for every page except the home page.”
Kast testified he understood this provision to mean that
“[a]nything that I sent to them had to be licensed,” but that
“if they provided the photos, [they] had to provide licensed
photos.” Similarly, Kast asserted that had he known he
needed to license photos for the developmental site, he
would have done just that; in fact, he later and on his own
licensed two stock photos for the site’s “live” version.
Separately, Kast argued he lacked control over Only
Websites: Only Websites published the website without his
consent and ignored multiple requests to replace the
infringing photos. Finally, Kast contended that he did not
reap a financial benefit from the infringing photos because
“[h]e made no money off the website” and “avoid[ing] a
license fee” is not a direct financial benefit.
At the charging conference, the parties wrangled over the
wording of the willfulness jury instruction. Erickson sought
an instruction that Kast acted willfully if he knew he
infringed Erickson’s copyrights, acted with reckless
disregard for Erickson’s copyrights, or “should have known”
his actions infringed Erickson’s copyrights. Kast objected
to the “should have known” prong, arguing that it set the
standard “much lower than recklessness.” The district court
8 ERICKSON PRODUCTIONS V. KAST
agreed with Erickson and included the “should have known”
prong.
The jury found by special verdict that Kast vicariously
and contributorily (but not directly) infringed Erickson’s
copyright on each of the photos and did so willfully.
Pursuant to 17 U.S.C. § 504(c)(2), the jury awarded
Erickson $150,000 in damages per photograph, for total
damages of $450,000.
b. The instant appeal
Kast timely appealed the district court’s judgment
against him. Kast initially briefed his case without the
assistance of counsel. We appointed pro bono counsel to
assist Kast with two of the issues he raised in his opening
brief: (1) whether the avoidance of licensing fees constitutes
a direct financial benefit for purposes of imposing vicarious
copyright liability; and (2) whether a “should have known”
willfulness instruction is proper under 17 U.S.C. § 504(c).
The parties submitted supplemental briefing on these issues,
the former an issue of first impression in this circuit. We
now consider whether to affirm (1) the jury’s vicarious
liability verdict, (2) the jury’s contributory liability verdict,
and (3) the jury’s willfulness finding. We also address
(4) some additional evidentiary and procedural matters.
STANDARDS OF REVIEW
“We review the district court’s denial of a motion for
directed verdict de novo.” Allstate Ins. Co. v. Herron,
634 F.3d 1101, 1109 (9th Cir. 2011). Legal questions are
reviewed de novo so long as they are “raise[d] . . . at some
point before the judge submitted the case to the jury[.]”
F.B.T. Prods., LLC v. Aftermath Records, 621 F.3d 958,
962–63 (9th Cir. 2010).
ERICKSON PRODUCTIONS V. KAST 9
Jury instructions “must fairly and adequately cover the
issues presented, must correctly state the law, and must not
be misleading.” Gantt v. City of Los Angeles, 717 F.3d 702,
706 (9th Cir. 2013) (quotation marks and citation omitted).
If a jury instruction is incorrect, reversal is appropriate
“unless the error is more probably than not harmless.”
Chuman v. Wright, 76 F.3d 292, 294 (9th Cir. 1996). If a
party fails to object to a jury instruction in the district court,
it can still be reviewed on appeal for plain error. See Hoard
v. Hartman, 904 F.3d 780, 786 (9th Cir. 2018). “We may
exercise our discretion to correct a district court on plain
error review when the following factors are met: (1) the
district court erred; (2) the error was obvious or plain; (3) the
error affected substantial rights; and (4) the error seriously
impaired the fairness, integrity, or public reputation of
judicial proceedings.” Id. at 787 (quotation marks and
citation omitted).
“We review the district court’s rulings concerning
discovery and evidentiary issues for an abuse of discretion
and reverse only if the district court’s ruling more likely than
not affected the verdict.” Kulas v. Flores, 255 F.3d 780, 783
(9th Cir. 2001) (citations omitted).
DISCUSSION
I. The Vicarious Liability Verdict
The jury found that Kast vicariously infringed
Erickson’s copyright through his employment of Only
Websites, the direct infringer. “To prevail on a vicarious
liability claim, [plaintiff] must prove [defendant] has (1) the
right and ability to supervise the infringing conduct and (2) a
direct financial interest in the infringing activity.” VHT, Inc.
v. Zillow Group, Inc., 918 F.3d 723, 745 (9th Cir. 2019)
10 ERICKSON PRODUCTIONS V. KAST
(citing Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 673
(9th Cir. 2017) (internal quotation marks omitted).
Kast argues the judge erred in denying his motion for a
directed verdict on vicarious liability because Erickson
presented no evidence that could constitute a direct financial
benefit as a matter of law. 3 We agree and vacate the jury’s
vicarious liability verdict.
“The essential aspect of the ‘direct financial benefit’
inquiry is whether there is a causal relationship between the
infringing activity and any financial benefit a defendant
reaps . . . .” Ellison v. Robertson, 357 F.3d 1072, 1079 (9th
Cir. 2004). Erickson claims Kast received three “direct
financial benefits” from Only Websites’ infringement:
(1) the photographs drew customers to purchase his services;
(2) he avoided paying licensing fees to Erickson; and (3) he
was able to “rush” the launch of his website. Each one fails.
3
Kast also argues that the jury’s vicarious liability verdict was not
supported by sufficient evidence. Kast failed to renew his motion for a
directed verdict in the trial court, so his sufficiency of the evidence
argument is forfeited. See Nitco Holding Corp. v. Boujikian, 491 F.3d
1086, 1089 (9th Cir. 2007) (“[A] post-verdict motion under Rule 50(b)
is an absolute prerequisite to any appeal based on insufficiency of the
evidence.”) (citing Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc.,
546 U.S. 394 (2006)). Insofar as Kast’s arguments address whether
certain alleged benefits were “direct financial benefits” as a matter of
law, rather than whether the evidence established that Kast received
those benefits, they are unaffected by this rule. See Cochran v. City of
Los Angeles, 222 F.3d 1195, 1200 (9th Cir. 2000) (failure to renew post-
verdict a motion for judgment as a matter of law made at the close of
evidence does not prevent our review of an “issue [that] does not concern
the sufficiency of the evidence presented to the jury.”).
ERICKSON PRODUCTIONS V. KAST 11
a. Enhanced attractiveness of Kast’s website
A website owner can receive a direct financial benefit
from the presence of infringing material on his or her
website, but only “where the availability of infringing
material acts as a draw for customers.” Ellison, 357 F.3d
at 1078 (internal quotation marks and citation omitted). If
the infringing material is “just an added benefit,” rather than
a draw, it does not confer a direct financial benefit on the
website owner. See id. at 1078–79.
Erickson claims the photographs enhanced the general
attractiveness of Kast’s website to customers, and thereby
“drew” visitors to purchase his services. Erickson argues
that, because the whole purpose of the website was to
advertise Kast’s wealth management company, Kast had a
direct financial interest in everything on the website that
enhanced its appeal to potential customers. However, a
financial benefit is not “direct” unless there is a “causal
relationship between the infringing activity and [the]
financial benefit.” Ellison, 357 F.3d at 1079. Erickson does
not contend that anyone visited Kast’s website in order to
view his photographs or purchased his services because they
saw the photographs. The parties agree that no one visited
the website or purchased anything after doing so. If Kast
had a direct financial interest in every piece of content on
this website that arguably made the website marginally more
attractive or presentable, then the requirement of a causal
link would be erased. Erickson does not argue the
photographs were anything more, at best, than an “added
benefit” to visitors of Kast’s website, so the infringement did
not confer a direct financial benefit on Kast as a matter of
law. See id.12 ERICKSON PRODUCTIONS V. KAST
b. Avoidance of licensing fees
Erickson claims “Kast enjoyed a direct [financial]
benefit from the illegal copying of Erickson’s works by
avoiding the license fees he would have otherwise been
required to pay[.]” Whether a vicarious infringer’s
avoidance of licensing fees constitutes a direct financial
benefit as a matter of law is a question of first impression in
this circuit. No other circuit appears to have addressed it,
either. 4 We hold that it does not.
As an initial matter, Erickson’s avoidance of fees claim
cannot be premised on any unlicensed use by Kast of
Erickson’s copyrighted photographs. That would result in
direct liability, a theory the jury rejected. See A&M Records,
Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001)
(“[Direct] infringers violate at least one exclusive right
granted to copyright holders under 17 U.S.C. § 106.”).
Additionally, to the extent Erickson suggests Kast owed
licensing fees as a result of his vicarious infringement, his
argument is plainly circular.
Instead, Erickson’s argument must be that Kast received
a direct financial benefit when Only Websites avoided
Erickson’s licensing fee. Only Websites surely owed
4
There is no consensus among district courts on this issue. Compare
Oppenheimer v. Allvoices, Inc., No. C 14-00499 LB, 2014 WL 2604033,
at *9 (N.D. Cal. June 10, 2014); Klein & Heuchan, Inc. v. CoStar Realty
Info., Inc., No. 8:08-cv-1227-T-30EAJ, 2009 WL 10670735, at *3 (M.D.
Fla. Nov. 25, 2009)) with Vander Music v. Azteca Int’l Corp., No. 2:08-
cv-08184-JHN-RCx, 2011 WL 13177301, at *7 (C.D. Cal. Jan. 21, 2011)
(Nguyen, J.); Thomson v. HMC Grp., No. CV 13-03273 DMG (VBKx),
2014 WL 12589313, at *4 (C.D. Cal. July 25, 2014); Broadvision Inc. v.
Gen. Elec. Co., No. 08 Civ. 1478(WHP), 2009 WL 1392059, at *4
(S.D.N.Y. May 5, 2009); F. E. L. Publ’ns, Ltd. v. Nat’l Conference of
Catholic Bishops, 466 F. Supp. 1034, 1042 (N.D. Ill. 1978).
ERICKSON PRODUCTIONS V. KAST 13
Erickson a licensing fee, and saved money by failing to pay
it, but the direct infringer’s avoidance of fees alone cannot
satisfy the requirement of a direct financial benefit to the
vicarious infringer. Otherwise, the requirement of a direct
financial benefit would be rendered meaningless, since—at
least where, as here, licenses are for sale—a direct infringer
necessarily saves money by failing to obtain a license. See
Worldwide Church of God v. Phila. Church of God, Inc.,
227 F.3d 1110, 1114 (9th Cir. 2000) (“The existence of a
license creates an affirmative defense to a claim of copyright
infringement.”).
Nor did Kast receive any other direct financial benefit as
a result of Only Websites’ failure to pay. In some
circumstances, a direct infringer’s avoidance of fees may
prove financially advantageous to a vicarious infringer. For
instance, Kast would have benefitted if Only Websites
turned its lower costs from fee avoidance into lower prices
for its website design services. See In re Aimster Copyright
Litig., 334 F.3d 643, 654 (7th Cir. 2003). But this benefit
would not be “direct,” since it would reach Kast only
incidentally, via Only Websites’ intervening decision to cut
prices. See id. (noting in dicta that a dance hall operator
benefitted only indirectly from an orchestra’s avoidance of
licensing fees). In any event, Erickson never claimed that
Only Websites and Kast were able to offer services more
cheaply or quickly because Only Websites infringed
Erickson’s copyright.
Erickson’s alternative theory that Only Websites
avoided the licensing fee in its capacity as Kast’s agent, such
that Kast himself is liable for its failure to pay, is also
unpersuasive. Kast employed Only Websites to develop the
website, but the latter’s decision to infringe Erickson’s
copyright would have exceeded the scope of any agency
14 ERICKSON PRODUCTIONS V. KAST
relationship that may have existed between them. See
Restatement (Third) of Agency § 2.02 cmt. h (illegal or
tortious acts exceed the scope of an agency relationship).
Thus, Only Websites’ avoidance of licensing fees did not
confer a direct financial benefit on Kast as a matter of law. 5
c. The “rush” completion of the website
Finally, Erickson contends Kast received a direct
financial benefit because the photographs enabled Kast to
“rush” the launch of his website. Indeed, Kast conceded that
he “rushed” the site out before it was finished in order to seek
appointment to manage certain estates. But Kast received no
money, clients, business inquiries, or website visitors by
rushing the website’s completion before removing
Erickson’s photos. Erickson never explained how using the
photos allowed Kast to launch the website more quickly, or
how the rushed launch enabled him to realize any profits at
all. Thus, the alleged rush conferred no financial benefit on
Kast at all and fails as a matter of law. See Ellison, 357 F.3d
at 1079.
II. The Contributory Liability Verdict
The jury also found that Kast contributorily infringed
Erickson’s copyright. A party engages in contributory
5
We find the parties’ attempts to fit Kast’s alleged avoidance of
licensing fees into Ellison’s “draw” inquiry unmoving. The “draw”
inquiry assumes that the financial benefit in question is an increase in
potential customers on the vicarious infringer’s website or in his place
of business. By contrast, the supposed benefit of avoiding a licensing
fee does not depend on how many people visit the website or buy
anything when they are there.
ERICKSON PRODUCTIONS V. KAST 15
copyright infringement when it “(1) has knowledge of
another’s infringement and (2) either (a) materially
contributes to or (b) induces that infringement.” VHT,
918 F.3d at 745 (citing Perfect 10, Inc. v. Visa Int’l Serv.,
Ass’n, 494 F.3d 788, 795 (9th Cir. 2007)). On appeal, Kast
challenges the jury instructions on the contributory liability
claim. 6 We find his argument unpersuasive and affirm the
contributory liability verdict.
Kast claims the trial judge erred by instructing the jury
that “knowledge” for contributory infringement purposes
includes having a “reason to know” of the infringement.
According to Kast, only “actual knowledge” or “willful
blindness” are sufficient.
Preliminarily, we note that Kast raised this issue for the
first time in his supplemental opening brief, with the
assistance of pro bono counsel. This argument exceeds the
scope of the issues pro bono counsel was instructed to brief
and argue. Kast himself did not object to this element of the
jury instructions, so we ordinarily would not address it. See
Galvan v. Alaska Dep’t of Corr., 397 F.3d 1198, 1204 (9th
Cir. 2005) (“Courts generally do not decide issues not raised
by the parties.”).
However, even if we were to reach this issue, we would
still uphold the contributory liability verdict. Kast did not
raise this objection at trial, so it is reviewed for plain error. 7
6
Kast also claims insufficient evidence supports the contributory
liability verdict. As with all his other sufficiency of the evidence
challenges, this argument is waived. See Nitco, 491 F.3d at 1089.
7
Erickson’s claim that Kast waived even plain error review of this
jury instruction is incorrect. Erickson is right that both parties stipulated
to the relevant instruction. However, merely submitting an erroneous
16 ERICKSON PRODUCTIONS V. KAST
“[I]n the civil context . . . plain errors should ‘encompass
only those errors that reach the pinnacle of fault envisioned
by [the plain error standard].’” C.B. v. City of Sonora,
769 F.3d 1005, 1018 (9th Cir. 2014) (quoting Hemmings v.
Tidyman’s Inc., 285 F.3d 1174, 1193 (9th Cir. 2002)
(internal alterations omitted)).
Here, even if the “should have known” instruction was
erroneous, the error was not plain. Inconsistency in our case
law on the “knowledge” element of contributory liability
precludes a finding of plain error. For instance, in Luvdarts,
LLC v. AT & T Mobility, LLC, 710 F.3d 1068, 1072–73 (9th
Cir. 2013), we held that “actual knowledge of specific acts
of infringement” and “[w]illful blindness of specific facts”
are the only two mental states that satisfy the “knowledge”
element of contributory infringement. Id. But in Louis
Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d
936, 943 (9th Cir. 2011), we cited with approval a “know or
have reason to know” instruction for contributory liability.
Id. (citing Napster, 239 F.3d at 1020). Neither case is close
to Kast’s on the facts. 8 While Luvdarts was decided after
Louis Vuitton, it did not explicitly overrule it. And both
cases were decided several years after Metro-Goldwyn-
Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005),
the case in which Kast claims the Supreme Court settled the
instruction does not waive a later challenge, so long as there is no
evidence that the appellant considered and rejected a correct instruction
“for some tactical or other reason.” See United States v. Perez, 116 F.3d
840, 845–46 (9th Cir. 1997); see also Crowley v. Epicept Corp., 883 F.3d
739, 748 (9th Cir. 2018). Here, there is no such evidence.
8
In Luvdarts, the alleged contributory infringer was a wireless
carrier whose network was used to send infringing multimedia content,
see 710 F.3d at 1070, while in Louis Vuitton, it was a company that
hosted websites that sold infringing goods, see 658 F.3d at 940.
ERICKSON PRODUCTIONS V. KAST 17
matter in favor of an “actual knowledge” requirement.
Without resolving the apparent tension between Luvdarts
and Louis Vuitton, we hold that Kast has not demonstrated
that the jury instructions were plainly erroneous.
Nor are we persuaded by Kast’s other arguments against
the contributory liability jury instructions. Kast challenges
the instruction requiring the jury to find that “Only Websites
did not have permission to copy or publish copies of
[Erickson’s] Photos and thus infringed [Erickson’s]
copyrights by doing so[.]” He insists this instruction
“ask[ed] the jury to make a finding not in evidence.” Kast
failed to object to this instruction below, and, in any case, he
is wrong on the merits. The parties stipulated that Only
Websites designed the infringing website, which “included
unauthorized copies of [Erickson’s] Photos” copied from
Wells Fargo’s website. And Erickson elicited unrefuted
testimony that neither Only Websites nor Kast had
permission to use the photos. Thus, these facts were in
evidence.
III. The Willfulness Finding
The jury also found Kast’s vicarious and contributory
infringement were willful. Kast claims the district court
erred when it instructed the jury that it could find that Kast’s
infringement was willful if Kast “should have known that
[his] acts infringed plaintiffs’ copyright.” We agree and
remand the issue of willfulness to the district court on the
existing record.
a. Whether the willfulness instruction was erroneous
The jury’s willfulness finding is relevant to its award of
statutory damages. Absent a finding of willfulness, the jury
may award statutory damages “in a sum of not less than $750
18 ERICKSON PRODUCTIONS V. KAST
or more than $30,000” per work infringed. 17 U.S.C.
§ 504(c)(1). However, if the copyright owner proves that the
infringement was “willful,” the court may increase the
statutory damage award to $150,000 per work infringed. Id.§ 504(c)(2).
At Kast’s trial, the judge instructed the jury:
“Infringement is considered willful when . . . (1) the
defendant knew that those acts infringed plaintiffs’
copyrights; or, (2) the defendant should have known that
those acts infringed plaintiffs’ copyright; or, (3) the
defendant engaged in conduct that was reckless or
demonstrated a reckless disregard for plaintiffs’ copyrights.”
The jury found that Kast’s contributory and vicarious
infringement was willful and awarded Erickson $450,000 in
statutory damages. Had the jury not made this finding,
Erickson’s statutory damages could not have exceeded
$90,000.
“A determination of willfulness requires an assessment
of a defendant’s state of mind.” Friedman v. Live Nation
Merch., Inc., 833 F.3d 1180, 1186 (9th Cir. 2016). “[T]o
prove willfulness under the Copyright Act, the plaintiff must
show (1) that the defendant was actually aware of the
infringing activity, or (2) that the defendant’s actions were
the result of reckless disregard for, or willful blindness to,
the copyright holder’s rights.” Unicolors, Inc. v. Urban
Outfitters, Inc., 853 F.3d 980, 991 (9th Cir. 2017) (quoting
Wash. Shoe Co. v. A-Z Sporting Goods, Inc., 704 F.3d 668,
674 (9th Cir. 2012)) (alteration in original).
A “should have known” instruction does not fit within
this framework because it is a negligence standard. To say
that a defendant “should have known” of a risk, but did not
know of it, is to say that he or she was “negligent” as to that
risk. See Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S.
ERICKSON PRODUCTIONS V. KAST 19
754, 770 (2011); see also BMG Rights Mgmt. (US) LCC v.
Cox Commc’ns, Inc., 881 F.3d 293, 310 (4th Cir. 2018)
(“The formulation ‘should have known’ reflects
negligence”); Swinton v. Potomac Corp., 270 F.3d 794, 803
(9th Cir. 2001) (noting that “should have known” is a
negligence standard).
Negligence is a less culpable mental state than actual
knowledge, willful blindness, or recklessness, the three
mental states that properly support a finding of willfulness.
See Global-Tech Appliances, 563 U.S. at 770; Unicolors,
853 F.3d at 992. “[A] willfully blind defendant is one who
takes deliberate actions to avoid confirming a high
probability of wrongdoing and who can almost be said to
have actually known the critical facts. By contrast, a
reckless defendant is one who merely knows of a substantial
and unjustified risk of such wrongdoing, and a negligent
defendant is one who should have known of a similar risk
but, in fact, did not.” Global-Tech Appliances, 563 U.S. at
769–70 (citations omitted). Thus, Kast is correct that the
judge permitted the jury to find willfulness on the basis of a
lesser mental state than our cases demand. 9
Erickson’s alternative interpretation of the jury
instructions is unpersuasive. Erickson claims that an
infringer who “should have known” of the infringing activity
9
The jury instruction was phrased in the disjunctive, that is, the jury
was asked whether Kast “knew” of, should have known of, or was
reckless with regard to Only Websites’ infringement. Thus, implicit in
a finding under the “should have known” prong would be a conclusion
that Kast did not, in fact, know of the risk or fact of infringement. See
Global-Tech Appliances, 563 U.S. at 770 (explaining that a negligent
defendant, by definition, does not know of a risk).
20 ERICKSON PRODUCTIONS V. KAST
has “constructive knowledge” of the infringement, and that
constructive knowledge is sufficient for willfulness.
Erickson is correct that a “should have known”
instruction conveys the concept of “constructive
knowledge.” See Knowledge, Black’s Law Dictionary (10th
ed. 2014) (“Constructive knowledge” is “[k]nowledge that
one using reasonable care or diligence should have, and
therefore that is attributed by law to a given person.”). The
problem for Erickson is that “constructive knowledge” is
distinct from, and less culpable than, any of the mental states
that support a finding of willfulness. Erickson cites
extensively from non-binding, out-of-circuit, and district
court authorities indicating that constructive knowledge can
support a willfulness finding, but all are incompatible with
our repeated requirement of actual knowledge, willful
blindness, or recklessness. 10 We have never held merely
negligent conduct to be willful, and we decline to do so now.
10
Erickson relies heavily on our “see also” citation, in Washington
Shoe, to a statement by a New York district court: “[t]o prove willfulness,
plaintiffs must show that the infringer had actual or constructive
knowledge that it was infringing the plaintiffs’ copyrights or else acted
in reckless disregard of the high probability that it was infringing
plaintiffs’ copyrights.” See Wash. Shoe, 704 F.3d at 674 (citing Arclightz
& Films Pvt. Ltd. v. Video Palace Inc., 303 F. Supp. 2d 356, 361–62
(S.D.N.Y. 2003) (emphasis added)). This oblique citation does not state
the law of this circuit. It is dicta. Washington Shoe analyzed the
infringer’s willfulness in the context of determining whether the
infringer “expressly aimed . . . an intentional act” at the State of
Washington, for purposes of personal jurisdiction. See Wash. Shoe,
704 F.3d at 673–74 (citing Mavrix Photo, Inc. v. Brand Techs., Inc.,
647 F.3d 1218, 1228 (9th Cir. 2011)). The question of statutory damages
was not before the court. It is doubly dicta because the Washington Shoe
defendant’s willful infringement was based on actual, not constructive,
knowledge of infringing activity. See 704 F.3d at 675. In fact, in the
ERICKSON PRODUCTIONS V. KAST 21
b. Whether the error requires reversal
The erroneous willfulness instruction was likely
prejudicial to Kast, so remand is required. See Chuman,
76 F.3d at 294. While the evidence may have established
that Kast was negligent, it is much less clear that it
established recklessness, willful blindness, or actual
knowledge. Kast presented evidence that he did not know
Only Websites was or might be infringing. Kast’s contract
with Only Websites suggests that Kast reasonably believed
it was Only Websites’ responsibility to obtain licenses for
Erickson’s photos. See VHT, 918 F.3d at 748 (“[C]ontinued
use of a work even after one has been notified of his or her
alleged infringement does not constitute willfulness so long
as one believes reasonably, and in good faith, that he or she
is not infringing.” (citing Evergreen Safety Council v. RSA
Network Inc., 697 F.3d 1221, 1228 (9th Cir. 2012)). Several
of Kast’s other actions also suggest that he was not reckless
with respect to Erickson’s rights: he obtained licenses for the
photos that he supplied to Only Websites, and promptly
removed the infringing photos when Erickson asked. If the
jury had been properly instructed, it might well have refused
to find Kast willful on this record.
We are unpersuaded by Erickson’s contention that the
jury’s contributory infringement verdict indicates that the
jury would have found willfulness even without the “should
have known” instruction. Erickson claims that a
contributory infringer has “knowledge” of the direct
sentence to which the citation to Arclightz is appended, we stated a
requirement that the defendant be “actually aware” of the infringement
or have acted with reckless disregard for or willful blindness to the
copyright holder’s rights. See id. at 674 (citing Louis Vuitton, 658 F.3d
at 944).
22 ERICKSON PRODUCTIONS V. KAST
infringer’s conduct if he “know[s] or ha[s] reason to know”
of the direct infringement. See Louis Vuitton, 658 F.3d at943 (citing Napster, 239 F.3d at 1020). Erickson contends
that, if Kast had “knowledge” for purposes of contributory
infringement, then he had “knowledge” for purposes of the
willfulness inquiry. However, a “knew or had reason to
know” instruction could be satisfied by a negligence finding
via its second prong, so the contributory infringement
finding does not necessarily mean the jury would have found
that Kast was actually aware of, or willfully blind or reckless
with respect to, Only Websites’ infringement. In any case,
Louis Vuitton is inapposite because it addressed a
contributory infringer with actual, rather than constructive,
knowledge. See id. at 944.
Accordingly, we remand the issue of willfulness to the
district court. We disagree with Kast’s claim that “the record
permits only one resolution of the factual issue” of
willfulness, see Pullman-Standard v. Swint, 456 U.S. 273,
292 (1982), and decline his invitation to enter judgment in
his favor.
IV. Kast’s Remaining Evidentiary and Procedural
Arguments
Kast makes several additional evidentiary and
procedural arguments, primarily in his pro se briefs. We
summarize these below. None are persuasive.
Kast claims he was an improper defendant because
“Erickson should have sued Atherton, not Kast.” Even if
Atherton Trust is also liable for the infringement, Kast would
be jointly and severally liable, so he is a proper defendant.
See Range Road Music, Inc. v. E. Coast Foods, Inc.,
668 F.3d 1148, 1151, 1155 (9th Cir. 2012) (imposing joint
ERICKSON PRODUCTIONS V. KAST 23
and several liability in copyright infringement case on
corporate entity and its sole officer and director).
Kast also argues that the district court made numerous
discovery and evidentiary errors, including that it should
have excluded information about Kast’s finances, it
permitted Erickson to withhold evidence relating to his
finances, and it permitted Erickson to introduce improper
character evidence. None of these alleged errors call for
reversal. For instance, Erickson’s questions regarding
Kast’s finances explored the ownership of various
businesses and trusts, not his personal wealth. Because such
questions arguably related to both vicarious liability and
willfulness, see Amazon, 508 F.3d at 1173 (requiring control
for vicarious liability); Castle Rock Entm’t v. Carol Publ’g
Grp., Inc., 955 F. Supp. 260, 267 (S.D.N.Y. 1997)
(considering whether “the defendants are sophisticated” in
determining willfulness), allowing it was not an abuse of
discretion. Likewise, although Kast points to billing line
items to suggest that Erickson withheld evidence, nothing
suggests any documents resulted from those
communications. Finally, even assuming Erickson’s prior-
relationship questioning was improper, Kast fails to show
that this error—or, in fact, any of the other alleged
evidentiary errors—was prejudicial. Kulas, 255 F.3d at 783.
CONCLUSION
We vacate the jury’s finding of vicarious liability. We
affirm the jury’s finding of contributory liability and
therefore affirm the judgment. See Hopkins v. Dow Corning
Corp., 33 F.3d 1116, 1119, 1126, 1128 (9th Cir. 1994)
(affirming judgment because jury’s verdict on at least one
theory of liability was upheld); DeWitt v. W. Pac. R.R. Co.,
719 F.2d 1448, 1451 (9th Cir. 1983) (same). We reverse the
24 ERICKSON PRODUCTIONS V. KAST
jury’s finding of willfulness and remand the issue of
statutory damages to the trial court.
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED. EACH PARTY TO BEAR ITS OWN
COSTS.