Tu v. TAD System Technology Inc., 2009 WL 2905780 (E.D.N.Y. 2009)
The Plaintiff produced software for bars and restaurants. The Plaintiff alleged that the Defendant distributed copies of the software that infringed its trademarks and copyrights, and that the Defendant had violated the DMCA. The Defendant failed to answer the complaint and the court entered default judgment. The Plaintiff argued that it should be awarded statutory damages for all three claims independently. The Court rejected awarding statutory damages for each of the three claims:
Only three courts in this Circuit appear to have reached the issue whether Plaintiffs may seek duplicative statutory damages under multiple legal theories for the same intellectual property injury. Recently, this Court adopted the recommendation and report of a magistrate judge declining to permit statutory damages under both the Copyright Act and the Lanham Act. See Computer Care Center, Inc., 2008 WL 4179653, at *9-10. Computer Care Center, Inc. in turn, cited an unpublished Memorandum and Order in Island Software & Computer Serv., Inc. v. Microsoft Corp., No. 01-CV-750, slip op. at 35 (E.D.N.Y. Jan 24, 2003), aff’d in part, vacated in part on other grounds, 413 F.3d 257 (2d Cir.2005), in which the district court held that the award of statutory damages under the Copyright and Lanham Act would constitute “an impennissible double recovery.” The Island Software court held that, “although [the defendants] may have committed ‘two wrongs,’ under the separate statutory schemes governing trademark and copyright …, those wrongs … produced one harm-[plaintiff's] economic loss.” Id. One court in this Circuit disagreed with this approach. In Microsoft Corp. v. Black Cat Computer Wholesale, Inc., 269 F.Supp.2d 118, 123-24 (W.D.N.Y.2002), the court relied on the Ninth Circuit’s decision in Nintendo to grant statutory damages to the plaintiff under both the Copyright and Lanham Acts.
This Court holds that Plaintiffs are not entitled to duplicative recoveries for the same intellectual property theft under multiple theories of liability. As the Second Circuit has made clear, “[a] plaintiff seeking compensation for the same injury under different legal theories is of course entitled to only one recovery.” Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 497 (2d Cir.1997). In an analogous case, the Second Circuit held that a party “may not obtain a double recovery where the damages for copyright infringement and trade secret misappropriation are coextensive.” Computer Assocs. Intern., Inc. v. Altai, Inc., 982 F.2d 693, 720 (2d Cir.1992). Second, while maximizing the judgment against Defendants through duplicative statutory damages may produce a greater deterrent effect, under the facts of this case, the broad range of statutory damages available under either the Copyright Act or Lanham Act is sufficient to put potential infringers “on notice that it costs less to obey [intellectual property] laws than to violate them .” N.Y. Chinese TV Programs, Inc., 1991 WL 113283 at *4 (internal quotation marks omitted).
These principles apply with greater force when a plaintiff seeks statutory damages under multiple legal theories. “The provision for statutory damages serves a dual purpose-to compensate copyright owners and to deter potential infringers.” N.Y. Chinese TV Programs, Inc. v. U.E. Enterprises, Inc., No. 89-CV-6082, 1991 WL 113283, at*3 (S.D.N.Y. June 14, 1991) (citing Fitzgerald Publishing Co. v. Baylor Publishing Co., 807 F.2d 1110, 1117 (2d Cir.1986)). First, awarding duplicative statutory damages under different legal theories fails to serve the first aim as compensation for the same injury could be and should be accomplished under a single grant of statutory damages. See Gucci v. Duty Free Apparel, Ltd., 315 F.Supp.2d 511, 520 (S.D.N.Y.2004) (“To the extent possible statutory damages should be woven out of the same bolt of cloth as actual damages”) (internal quotation marks omitted).
*5 Here, there is no doubt that the damages sustained by Plaintiffs are coextensive; it is Defendants’ manufacture, sale, and distribution of a “cracked” version of ADELO for Restaurants that accounts for Plaintiffs’ economic damages under either of the three intellectual property statutes. Plaintiffs can recover their economic loss and the Court can impose some punitive or deterrent element of damages under any of the three Acts Defendants violated, and it is not necessary to award the same damages under all three. Accordingly, the Court concludes that Plaintiffs are not entitled to duplicative statutory damages under the Copyright Act, DMCA, and the Lanham Act. Rather, because the gravamen of this case is that Defendants sold and distributed a pirated version of Plaintiffs’ copyrighted material, the Court finds that damages under the Copyright Act to be the most
appropriate remedy. FN2N2. The Complaint states that in “some cases” purchasers were not aware that they were using a cracked version of ALDELO for Restaurants. Compl. ¶ 12. It logically follows that most purchasers knew that they were using a pirated version of the program. Accordingly, purchasers were likely motivated by the allure of a cheaper product rather than an Aldelo-trademarked and sanctioned product. Such circumstances reinforce the primacy of the copyright violation in this case.
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