Bouchat v. Bon-ton Department Stores, Inc.: claim preclusion, copyright law, and massive infringements.

• Author: Byars, M. Brent

TABLE OF CONTENTS INTRODUCTION II. BACKGROUND A. Bouchat I: Infringement Action Against the Ravens and NFLP B. Bouchat II: Bouchat's Damages Action Against the Ravens and NFLP C. Champion and Bon-ton: Bouchat's Claim Against the Licensees III. ANALYSIS A. Champion's Application of the Virtual Representation Doctrine B. When Are Claims Under the Copyright Act Identical? IV. CONCLUSION I. INTRODUCTION

Frederick Bouchat, an amateur artist, was so excited that an NFL team was moving to Baltimore that he created drawings and designs for the team in his free time. (1) Initially willing to provide one of his drawings in exchange for only a "letter of recognition" and an autographed helmet, he later filed suit after discovering that the Baltimore Ravens and National Football League Properties ("NFLP") had used his drawing in their team logo without authorization or acknowledgement. (2) A jury returned a verdict of copyright infringement against the Ravens and NFLP, and the Fourth Circuit affirmed in an interlocutory appeal in Bouchat v. Baltimore Ravens, Inc. (Bouchat I). (3) In the damages phase of the trial, however, the jury found that none of the Ravens' or NFLP's profits were attributable to their infringing acts, and the Fourth Circuit affirmed in Bouchat v. Baltimore Ravens, Inc. (Bouchat II). (4)

While Bouchat's actions in Bouchat I were pending, he also filed a series of suits against the "downstream defendants," those manufacturers, retailers, and broadcast organizations who had received licenses from the NFLP to exploit the Ravens logo. (5) Bouchat and the downstream defendants both moved for partial summary judgment. (6) While Bouchat attempted to estop the downstream defendants from defending his infringement actions on the issue of liability, the downstream defendants tried to preclude Bouchat from collecting any damages from them. (7) The district court in Bouchat v. Champion Products, Inc. (Champion) (8) held that the downstream defendants were precluded from denying their infringement of Bouchat's copyright, but it also granted defendants' motions to preclude Bouchat from seeking any damages from them. (9) The court of appeals affirmed in Bouchat v. Bon-ton Department Stores, Inc. (Bon-ton). (10)

To reach this result, the Champion and Bon-ton courts were required to apply traditional rules of claim preclusion against a background of substantive copyright law. Claim preclusion requires (1) a final judgment on the merits, which neither party contested, (2) that the parties be identical or in privity, and (3) that the claims in the two actions be identical. (11) The Champion court held that NFLP had virtually represented the downstream defendants in the previous suits, thus satisfying the second requirement of privity. (12) Because neither party appealed this determination, the Bon-ton court reviewed only the district court's conclusions that the claims in the first suit were identical with the claims in the second. (13)

As a result, the Bon-ton court addressed several complications involved in applying the identity of claims standard in light of copyright law, including whether Bouchat's request for actual damages instead of profits should change the identity of claims analysis and whether the application of claim preclusion would defeat the traditional joint tortfeasor rule of copyright law. The court's analysis was problematic in light of the complex system of claims and liabilities regulated by copyright law. (14) This Note argues that future courts should exercise caution because of the unique factual circumstances of the Bouchat litigation; (15) courts should not erroneously rely on any precedent these cases may establish with respect to the virtual representation and claim preclusion doctrines in the copyright context. (16)

The Bouchat litigation conforms to a model of copyright litigation with which courts will increasingly have to grapple. Recent copyright cases and legislative initiatives have struggled to address massive schemes of infringement, in which a large number of individuals are accused of infringing either one or a set of copyrights. (17) Like the Bou chat litigation, the copyright holder in these cases first asserts claims against a party that, it claims, is secondarily liable for the direct infringement of another, larger set of users. (18) The copyright owner will then turn his or her attention to the individual infringers who actually performed the infringement. (19) With digital technology enabling such massive infringements, this model of litigation will likely continue to shape the substantive foundations of copyright law. (20)

The Copyright Act is characterized by separate and distinct causes of actions, complicating its application to massive infringements. (21) In Bon-ton, Judge Niemeyer's concurring opinion especially addressed the fragmented nature of copyright claims. (22) Copyright claims can be atomized in multiple ways. First, the Copyright Act secures to authors the separate exclusive rights of reproduction, preparation of derivative works, distribution, performance, display, and, for sound recordings, digital broadcast. (23) The author can bring a separate claim for each infringement of each exclusive right. (24) The Act further separates the distribution right by defining it as any sale or other transfer of ownership, rental, lease, or lending. (25)

Second, once an author establishes infringement, the Act secures the right to receive either actual damages and disgorgement of any of the infringer's profits or statutory damages in amounts determined by the Act per work infringed. (26) Third, in addition to the separate claims and theories Judge Niemeyer describes, the Act is further particularized because of the development of theories of secondary liability. (27) Finally, commentators have suggested that the provisions of the Digital Millennium Copyright Act ("DMCA") that were designed to address technologically-enabled wholesale infringement are related to, but distinct from theories of secondary liability. (28)

Commentary has tended to focus on the substantive dimension of this fragmentation of copyright claims, and few scholars have systematically addressed how copyright owners' tactics for enforcing their claims in successive suits against secondary and direct infringers can frustrate many of the policies that motivate the procedural rules governing such litigation. (29) Ultimately, the courts' analyses in these cases indicate that courts have not developed a systematic way of describing the interactions of liabilities established by copyright law.

This Note describes the limitations of each of the holdings in the Bouchat litigation, and suggests alternative paths the courts could have considered, but did not. Part II describes the background of the case. Part III analyzes application of the relevant doctrines against the background of copyright law. Part III.A assesses Champion's virtual representation holding in light of the fragmentation of copyright claims, and Part III.B addresses the impact of the Bon-ton court's identity of claims analysis on two important elements of copyright law: the relationship of actual damages to profit damages and the joint tortfeasor rule.

2. BACKGROUND

   A. Bouchat I: Infringement Action Against the Ravens and NFLP In 1995, Frederick Bouchat was a security guard in Baltimore, Maryland (30) when the NFL announced that a football team would be relocating to the Baltimore area. (31) Before the NFL and the team had settled on a new name, Bouchat began producing artwork depicting his favorite possible name: the Ravens. (32) Bouchat's drawings included a design of a Raven holding a shield, which he affixed to a miniature football helmet and gave to Eugene Conti, a state official that worked in his office building. (33)

   Conti arranged a meeting between Bouchat and John Moag, the chairman of the Maryland Stadium Authority and the official primarily responsible for bringing the team to Baltimore. (34) In March 1996, Bouchat met Moag at Moag's downtown law firm, in a building that also housed the team's temporary offices. (35) Moag told Bouchat that the team was definitely to be named the Ravens, and he asked Bouchat to send him the drawings, which he said he would forward to the Ravens for consideration. (36)

   The next day Bouchat successfully transmitted the design to Moag's office but did not keep the printed fax confirmation. (37) The Ravens team owner, David Modell, then met with NFLP's design director and design team to discuss development of a team logo. (38) In June 1996, the Ravens unveiled its new logo of a raven holding a shield. (39) Bouchat and some co-workers to whom he had shown his designs recognized the Ravens logo as Bouchat's work. (40) Bouchat subsequently contacted a lawyer and obtained a copyright registration for his shield drawing. (41) In May 1997, Bouchat filed an action in the United States District Court for the District of Maryland, claiming that the Ravens had infringed his copyright. (42)

   After a nearly five-week trial, a jury found that the Ravens logo infringed Bouchat's copyright. (43) On interlocutory appeal, the Fourth Circuit held that Bouchat had provided sufficient evidence that the defendants had access to the work, despite a lack of direct evidence that they had ever seen it. (44) Although this holding mooted the need to reach the question, the Fourth Circuit went on to adopt the "strikingly similar" doctrine of the Second Circuit. (45) This doctrine permits the factfinder to infer access when two works are "so similar as to create a high probability of copying and negate the reasonable possibility of independent creation." (46) The Fourth Circuit affirmed the denial of the defendant's motion for judgment as a matter of law and answered the questions posed by the interlocutory appeals adversely to the defendants. (47)

   Judge King dissented from the majority opinion, finding that the...