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Where the defendant is a corporation, it can be held liable for acts of willful infringement committed by its employees within the scope of their employment or for its benefit. An employer is responsible for copyright infringement committed by an employee in the course of employment, under the normal agency rule of respondeat superior.
As part of its marketing efforts, Monster organizes and sponsors an annual event called the "Ruckus in the Rockies," which consists of a snowboarding competition and an after-party. On May 5, 2012, coincidentally the day after Yauch (one of the Beastie Boys members) died, Monster held the second annual Ruckus in the Rockies at Lake Louise in Alberta, Canada. Monster booked various disc jockeys ("DJs") to perform at the after-party. One such DJ was Zach Sciacca, who records and performs under the name "Z-Trip." In early 2011, Z-Trip had entered into an agreement with the Beastie Boys to create a remix of some of their songs to promote the group's then-upcoming album, "Hot Sauce Committee Part II." Under the agreement, Z-Trip was authorized to offer the remix for free as a promotional item. However, Z-Trip did not have the right to sell or license the remix, or to authorize third-parties to use it. Nor did he obtain any rights to the underlying Beastie Boys songs. On April 30, 2011, Z-Trip posted the remix on his website, where fans could download or stream it for free. The remix was entitled "Beastie Boys All-Access Megamix" (the "Megamix"). At the 2012 Ruckus in the Rockies after-party, Z-Trip performed for 90 minutes. Tr. 457. His set included Beastie Boys music, in part to honor Yauch; other DJs also played music by the Beastie Boys. At some point, Z-Trip said to the crowd, "Rest in peace, MCA." Soon after the 2012 Ruckus, Monster's regional marketing director, Nelson Phillips, worked with videographer Clayton Larsen to create a recap video with highlights from the event. Phillips intended to use the video to promote the Monster brand. For the video's soundtrack, Phillips directed Larsen to use excerpts from Z-Trip's Megamix of Beastie Boys songs. Monster never obtained, or attempted to obtain, permission from the Beastie Boys or their management to use the Beastie Boys' music in the video. At trial, Phillips testified that he believed that Z-Trip, by his words and conduct, had authorized Phillips to use the Megamix, including the underlying Beastie Boys' songs, in Monster's promotional video. Phillips testified that Z-Trip had conveyed this authorization to him orally, during a conversation in the after-party's "green room"; Z-Trip denied having any such conversation, or giving any such authorization, or telling anyone at Monster that he had any rights in the Beastie Boys' music. Phillips further claimed that Z-Trip's authorization to use the Beastie Boys' songs in the promotional video could be inferred from a short email exchange in which he sent the video to Z-Trip for "approv[al]," and Z-Trip responded, "Dope!" Monster's promotional video is just over four minutes long. The Beastie Boys' music was ubiquitous in the video: the video's soundtrack consists of excerpts from five Beastie Boys songs; the video does not contain any voice-overs, narration, or interviews; the Beastie Boys' music, which fills all but 32 seconds of the video, was the main aural event. Near the end of the video, the credits roll in neon green and grey text, Monster's official brand colors. In pertinent part, the credits read: “MUSIC / ALL-ACCESS BEASTIE BOYS MEGA MIX / COURTESY OF Z-TRIP / DOWNLOAD THE LINK FOR FREE AT / ZTRIP.BANDCAMP.COM” (/ is a paragraph break). On May 9, 2012, Monster posted the video on its website, YouTube channel, and Facebook page. The description of the video read: "Beastie Boys Megamix by Z-Trip. Download 'All-Access A Beastie Boys Megamix' here: http://ztrip.bandcamp.com." Monster also sent press releases to various snowboarding magazines and websites; these included the same language. "Dozens" of websites posted Monster's release verbatim, including the reference to the Beastie Boys Megamix.
A few weeks later, Monster received a letter from counsel for the Beastie Boys, which stated that Monster did not have permission to use the Beastie Boys' music in the video. Phillips immediately removed the video from Monster's YouTube channel. Phillips and Larsen later edited the video, to replace the music and remove the references to the Beastie Boys, and then reposted it. As of August 2012, the video had been viewed 13,341 times. On August 8, 2012, the Beastie Boys filed suit against Monster. Factually, the Complaint alleged that Monster, without the Beastie Boys' consent, had used the Beastie Boys' songs in the video, that Monster had thereby sought to associate its products with the Beastie Boys and to convey the Beastie Boys' endorsement of Monster, that the video text had included the names "Beastie Boys" and "MCA" for the same purpose, and that Monster had posted links to the video on various websites to advertise and promote Monster's products, events, and corporate goodwill. Based on these allegations, the Beastie Boys asserted claims of copyright infringement in violation of the Copyright Act, and false endorsement in violation of the Lanham Act. Consequently, Monster brought a third-party Complaint against Z-Trip. Consistent with the affirmative defenses in its Answer, Monster alleged that Z-Trip had caused any damage to the Beastie Boys for which Monster might be found liable by (1) contracting with Monster to allow it to make unrestricted use of the Megamix, and (2) fraudulently leading Monster to believe that Z-Trip had authority to license the Beastie Boys' recordings contained in the Megamix. Following discovery, Z-Trip moved for summary judgment on Monster's claims against him, which was granted. On the Copyright Act claims, the jury found each of Monster’s alleged acts of infringement willful and awarded damages in favor of the Beastie Boys. On the Lanham Act claim, the jury found that Monster had "used the Beastie Boys' persona without permission, thereby suggesting a false endorsement of Monster's products." It also found that Monster had "intended to deceive consumers concerning the Beastie Boys endorsement of its products," and had not proven "that consumers were not, in fact, confused or deceived as to whether the Beastie Boys endorsed Monster's products."
Was the evidence adduced by the Beastie Boys sufficient to support the finding of willful infringement, warranting the award of statutory damages?
Notwithstanding his background (in the forestry and skiing industries) and his lack of training in music licensing, there was ample evidence from which a jury could conclude that Phillips well appreciated the concept of copyright and the consequent need to obtain permission to use an artist's music in the promotional videos he created for Monster. Phillips testified that, before the 2012 Ruckus, he had produced about a dozen recap videos on Monster's behalf. To create a soundtrack for each video, Phillips testified, he either contacted the artist to seek permission to use that artist's music or used music that an artist had explicitly asked him to use. Phillips also was familiar with a written sponsorship agreement between Monster and a DJ who performs as "Mat the Alien" that allowed Monster to use that DJ's music. And Phillips' claim to have asked Z-Trip for permission to use the Megamix in the recap video arguably reinforced the inference that he understood the need to obtain some sort of authorization. Notwithstanding this awareness, Phillips did not seek permission from the Beastie Boys or their manager to use their music. Nor did he believe that anyone else at Monster had done so. The jury could thereby have determined that Phillips acted in reckless disregard of the Beastie Boys' rights when he directed Larsen to use their music in Monster's recap video without seeking the Beastie Boys' authorization. To be sure, Phillips later claimed that he believed that Z-Trip had granted him the necessary permission during an after-party conversation in the green room. But there was no corroboration of that claim (e.g., in the form of a contemporaneous email), and Z-Trip forcefully disputed it. He testified that he had never granted permission for Monster to use the Beastie Boys' music in the video. The jury was entitled to credit that denial and to reject Phillips' claim of authorization. Unlike Phillips' disputed claim to have received oral authorization from Z-Trip to use the Beastie Boys' copyrighted music, the May 8, 2012 email exchange between Phillips and Z-Trip is a durable, indisputable fact. At trial, Monster, standing by Phillips's testimony, argued that the post-Ruckus email exchange was a good-faith attempt by Phillips to secure the needed authorization to include the Beastie Boys' music in the recap video. Had the jury accepted Monster's reading of the email exchange, it presumably would not have found willful copyright infringement. But the jury evidently did not credit Monster on that point. And the Court, on its Rule 50(b) review, rejects Monster's claim that the Phillips/Z-Trip email exchange disproves that it acted with reckless disregard of the Beastie Boys' copyright interests. In his email, Phillips asked Z-Trip to review the video "and let me know if you approve." Z-Trip replied, "Dope!" and asked Phillips to add a plug for his Megamix. On its face, this exchange does not ask for, and says nothing about, approval of the video on behalf of the Beastie Boys. The Beastie Boys are not referenced at all in Phillips' email; and they are referenced in Z-Trip's response only as part of a descriptor ("my Beasties mix") of the Megamix that Z-Trip, sua sponte, asked Phillips to plug. The email thus is more reasonably read—and a reasonable jury would be well within its rights to read it—as seeking Z-Trip's approval for the use of Z-Trip's own likeness, name, words, and logo in the video. Z-Trip himself appears in the video performing at the after-party, and Monster's contract with Z-Trip required Monster to secure his approval before recording any portion of his performance. Monster had not theretofore done so. Indeed, Z-Trip testified that he had understood Phillips' email as a request for permission to use the video recording Monster had made of him. In sum, a reasonable jury could find that Phillips was well aware, including based on his experience securing approval of other artists' music for similar recap videos at Monster, of the legal duty to secure the Beastie Boys' approval for the use of their music in the company's video, but that Phillips recklessly disregarded that duty.
Further, the trial evidence as to Nichols, Monster's director of interactive marketing, reinforced this finding. Nichols was not involved in the creation of the recap video. But he posted it online—also without ever ascertaining that Monster had obtained authorization from the Beastie Boys to use their music. Nichols was familiar with music licensing procedures; his job responsibilities required sensitivity to others' intellectual property rights, including procuring sponsorship agreements with athletes and video game companies. Nichols also was responsible for producing and updating Monster's social media guide, which instructed employees on how to use YouTube, Facebook, and other websites in promoting the Monster brand. Revealingly, Nichols had been vigilant in protecting Monster's intellectual property rights: He had, for example, initiated the take-down of websites and advertisements that had used Monster's trademarked logo without authorization. Despite his facility with intellectual property and licensing, and despite his solicitude for Monster's intellectual property rights, Nichols never inquired into whether Monster had a license to use the Beastie Boys' music in its promotional video. Nichols also was aware that, unlike some earlier recap videos, this video was not produced by a third-party content provider who was responsible for securing the rights to the music. Yet, before posting the video to Monster's website, YouTube channel, and Facebook page, Nichols ensured only that the video "fit with the Monster Energy brand." The jury could reasonably conclude that this failure to investigate constituted reckless disregard.