Gerard Basquiat v. Kemper
Snowboards ::
[Complete transcript of judges ruling.]
Gerard Basquiat v. Kemper Snowboards and Drew
Gardner
United States District Court, Southern District of New York
April 21, 1998
OWEN, District Judge.
Before me is a motion
for a new trial, or, alternatively, a remittitur of a damage award. In the
Fall of 1997 a jury trial was held on a copyright infringement claim
brought by Gerard Basquiat, father of deceased artist Jean- Michel
Basquiat and administrator of his estate, concerning the appearance of his
son's art work on a snowboard manufactured and sold by Kemper Snowboards
(the "Basquiat board"). [FN1] The jury returned a verdict for the Basquiat
estate, awarding damages in the amount of $450,000.00. Kemper moves as
above. I hereby grant Kemper's motion for new trial on the limited issue
of damages, [FN2] after ordering certain discovery should the parties seek
it.
FN1. Kemper
Snowboards is the snowboard division of California Pro, Inc., a subsidiary
of California Pro Sports. Mr. Drew Gardner, also a named defendant, is the
vice-president of Kemper Snowboards. Hereinafter defendants Kemper
Snowboards and Mr. Gardner will be referred to collectively as "Kemper".
FN2. Both liability
and damages were in issue and evidence on the issue of willfulness was
submitted to the jury. The jury found the defendants' infringement to be
willful. The plaintiff then elected to seek actual damages and profits
rather than those provided for by statute. See 17 U.S.C. § 504(b); cf. 17
U.S.C. 504(c)(1).
Plaintiff Basquiat
sought recovery of Kemper's profits attributable to the Basquiat board, as
allowed under the Copyright Act, 17 U.S.C. § 504(b) (1988). [FN3] The
evidentiary burden regarding those profits was initially with plaintiff. A
copyright plaintiff must, at the outset, establish the number of
infringing items sold and their initial selling price, after which the
defendant must establish direct costs and deductible expenses.
Id.
As stated by the Second Circuit, "[t]he copyright
holder cannot realistically be required to offer more proof than this
since the facts and figures of the sales and markdowns is a subject
exclusively within the infringer's knowledge.... Once a prima facie case
of gross revenue [is] established, the burden shift[s] to [the
defendant]." In Design v. Kmart Apparel Corp., 13 F.3d 559, 564 (2d
Cir.1994). Thus, Kemper was required to prove "(1) ... that each category
of overhead contributed to the production of the infringing items, and (2)
[to offer] a fair and acceptable formula for allocating a given portion of
overhead to those items." In Design v. Lauren Knitwear Corp., 782 F.Supp.
824, 832-33 (S.D.N.Y.1991). Both the Basquiat estate and Kemper presented
evidence.
FN3. A copyright
plaintiff may also seek actual damages, but there was no evidence here
that the Basquiat estate lost revenue from or was damaged by Kemper's
illegal use of the art work.
Plaintiff, on its
burden of establishing Kemper's gross revenues for the Basquiat board that
was sold in 1995 and thereafter, submitted a single invoice dated
October 28, 1994
, for a prior unrelated board sold the year before
the Basquiat board replaced it in Kemper's subsequent marketing cycle.
[FN4] This invoice showed a unit wholesale price of $275.00. To argue
subsequently that Kemper had gross profits for its Basquiat board in the
amount of $1,063,700 .00 million, plaintiff merely multiplied that $275.00
figure by 3,868, the number of Basquiat boards that Kemper's records
showed were sold. Kemper's records, however, summarized in an exhibit
proffered as a computer printout, gave a much different picture, showing a
total sales revenue of $669,827.00. It then set forth the cost of
manufacture in
Austria
, as well as shipping and customs charges, and a
percentage of certain overhead expenditures. This exhibit, showing a loss
of $59,000 for the Basquiat board, was a revision of an earlier one that
showed income of $6,249. The difference, Kemper's financial officer
testified, was due to the use of specific invoices rather than percentages
in tallying certain expenses. This, needless to say, gave rise to much
cross- examination and argument on the reliability of the revision.
FN4. The Basquiat
board sold under "The Tempest" snowboard line sold by Kemper over several
years but embodying different designs for each of those years. Therefore,
although the 1994 Tempest board had nothing to do with Basquiat, the 1995
Tempest board did. The fact that the invoice proffered reflected the
wholesale price of the 1994 Tempest board, rather than the one at issue,
has been acknowledged by plaintiff's counsel in its letter to the court of
November 13, 1997.
In this Court's view,
plaintiff's evidence of only a single invoice for a prior year's
non-Basquiat board to establish the wholesale price of all Basquiat boards
created only the weakest--if any--inference of the Basquiat board's
initial--and, as multiplied by Kemper's sales numbers, total--sales
revenue. This, I conclude, was inadequate under the law. There was
evidence offered by Kemper that its boards, including the Basquiat board,
were sold at all kinds of different prices at different times. Although a
copyright plaintiff is not required to show more than the initial price of
an accused work, [FN5] Kmart Apparel Corp., 13 F.3d at 564, there appears
to be no cases allowing less than specific evidence of that price.
FN5. Which was not
the evidence proffered here, see note 4, supra.
As to defendants'
burden, the law is well-stated in Kmart Apparel Corp., such that "[o]nce a
prima facie case of gross revenue [is] established, the burden shift[s] to
[the defendant] to prove its deductible expenses.... In discharging that
burden it is not necessary for [the defendant's] proof to be precise and
perfect because, absent bad faith, reasonable approximations constitute
satisfactory evidence.... Any doubts resulting from an infringer's failure
to present adequate proof of its costs are resolved in favor of the
copyright holder." 13 F.3d at 564 (internal citations omitted). Whether
there were such doubts here was vigorously litigated.
In addition, it is
regrettable but clear that plaintiff's trial counsel throughout the trial
made a number of prejudicial inflammatory comments to the jury, commencing
with his opening and continuing through the second round of summations
that the Court had permitted under the circumstances.
It began when
plaintiff's counsel opened, trying to paint defendant in an obdurate
unflattering light, said to the jury that up until that very morning
defendants had not acknowledged that the Basquiat painting on Kemper's
snowboard was a copy. He specifically told the jury "... this morning [ ]
for the first time we were told: "Hey, we admit copying." This was
objected to on the ground that this had been stated as an undisputed fact
in the parties joint pretrial order signed by District Judge Preska over a
month earlier and obviously prepared by the parties over some days or
weeks prior thereto. Later, in another context during the cross
examination of Kemper's chief financial officer, Barry Hollander,
plaintiff's counsel at the side bar acknowledged this.
THE COURT: Where are
you going with this?
PLAINTIFF'S COUNSEL:
There are going to be issues as to when they admitted that they copied. We
have allowed him to read the pretrial order. I'm just probing now what the
position of the campaign was and when it changed, if it ever changed of.
The fact is that they defended themselves very vigorously, certainly up to
the time of the pretrial order, and, well, you know the rest.
THE COURT: They are
defending vigorously now on the ground that even if you are completely
right on infringement the product was a bust and they lost money on it,
and so there is no profit and therefore no damages.
PLAINTIFF'S COUNSEL:
Except, your Honor, that they could have come forward a lot earlier and
said, you know you're right, we copied. They didn't have to put us to this
burden.
DEFENDANT'S COUNSEL:
Your Honor, how could any human being with anything approaching 20-20
vision look at those two paintings on that board and say that they are not
the same thing? We've never said they weren't the same thing. No person
could rationally claim that. Put the paintings and the board side by side,
they're identical. [FN6]
FN6. [Footnote by the
Court]: I take judicial notice that they are absolutely identical.
Next, in his opening,
plaintiff's counsel stated:
If we prove the
elements as we hope and trust that we will, the penalty for these
defendants is that they have to give up their profits.
Unfortunately, there
is no way we can punish them, but we can ask you the jury if you find that
we've met our burden to make--
THE COURT: You are
objecting to that.
DEFENDANT'S COUNSEL:
Yes, your Honor.
THE COURT: I sustain
that. The jury is to disregard anything that is said about punishment, or
unfortunately this or that, or the other. That is not before you. You are
not to consider it.
Because of the
problems with plaintiff's counsel arguments to the jury in closing, the
Court, after the usual summations, allowed, the next trial day, a brief
second round of summations. In the first day's summations, counsel, making
a missing witness argument, stated "Of course, the Kemper people are not
here to see what's been going on." There was an objection that was
sustained and plaintiff's counsel apologized, acknowledging that Kemper's
CFO Barry Hollander had been there and testified. Then plaintiff's counsel
then argued to the jury that the Kemper staff had closed their eyes to
this case, stated
Your memory will
govern on what [Hollander] told you from the witness stand yesterday when
I asked him what he knew about the Basquiat claim, and Gardner's version
and Kemper's version and basically he said he didn't know anything.
(emphasis supplied)
That was not so
either. On the contrary, Hollander had testified on cross- examination by
plaintiff's counsel as follows:
Q. As far as when
this claim came in were you consulted about it? Were you informed of it?
A. I was informed of
it.
* * *
Q. When you learned
of the claim did you make any investigation as to the background of the
claim, what happened?
A. I asked Drew to
contact our attorney.
Q. Aside from doing
that, did you do anything else?
A. I asked Drew to
explain what happened, how we got the art work.
Q. And did Drew tell
you how he got the art work?
A. Yes.
* * *
Q. What did he tell
you?
A. From Matt Ready.
Immediately following
this cross-examination, and plaintiff's counsel wishing to pursue this
line, the Court gave him permission to do it observing:
THE COURT: You have
several things floating around here that some of [them] may come back to
bite you because if you start asking questions about, what did you talk
about? Is that what you are going to ask? Did you talk about defending
this?
PLAINTIFF'S COUNSEL:
Strategy, yes.
THE COURT: He may
give you some idea of strategy that you're going to be stuck with whatever
he says. You may not like what he says, but you are opening the door to
all kinds of--
PLAINTIFF'S COUNSEL:
I'll go on to something else.
(emphasis supplied)
Since, as noted
above, plaintiff's counsel declining to pursue the issue further, this
left no basis in the record whatever for his assertions on summation,
"They didn't know anything." Obviously, the record is to the contrary.
Next, during his
first summation, plaintiff's counsel, in addressing the financial schedule
put in by Kemper stated:
So coming full circle
then, what we have in essence, ladies and gentlemen, is a defendant who
clearly lied from the outset to
me.
[ [FN7]] That seems to be undisputed. And in terms
of presenting evidence to you has presented evidence which on its face I
suggest is totally misleading, confusing, inaccurate, and most of all,
look, at the way it was prepared, and the way it was presented, because
that's key.
FN7. [Footnote by the
Court]: The claim that he, the lawyer, was specifically lied to, does not
have support in the record. I can only assume that this is an advocate's
strong comment as to his view and assertion to the jury that the defense
lacked substance and credibility.
They chose to present
you with these two documents which [Kemper's lawyer] prepared, and the
remarkable thing--
THE COURT: He didn't
prepare them.
DEFENDANT'S COUNSEL:
Objection.
THE COURT: The
evidence is that the witness [Hollander] pushed buttons on a computer and
the computer put it out, and then he took it [to] the lawyer's office and
the lawyer put it in its present form.
PLAINTIFF'S COUNSEL:
No, no.
(emphasis supplied)
Plaintiff's counsel
was clearly wrong, for the record on this subject from his
cross-examination of Hollander reads:
Q. You gave us facts
and figure (sic) in your exhibit Z, correct?
A. Correct.
Q. Did you prepare
that?
A. In conjunction
with counsel, yes. It's in their format. It's the numbers they got from
me.
* * *
A. [T]he computer
just gave me the total cost of sales just like it gave me total sales[.]
Accordingly, there
was no basis for plaintiff's counsel to argue as he did that Kemper's
lawyer had prepared "misleading, confusing, inaccurate ..." documentation
which he had vigorously contended when confronted with the Court's
objection.
Because of all this,
as observed earlier, a further summation was permitted the next trial day
by both sides. In that summation by plaintiff's counsel, the following
occurred:
Watch what we have is
immutable, that doesn't change, and that is that they want you to believe
that he did it [the Basquiat board] independently. He also brought them
Special K. Now you might credit them, and I expect that you won't, but you
might, that they didn't know about Basquiat, that
Gardner
didn't know, but--
DEFENDANT'S COUNSEL:
Objection.
THE COURT: Counsel,
you're going to have to come to the sidebar.
PLAINTIFF'S COUNSEL:
Your honor, I would ask that my summation not be interrupted this way.
THE COURT: You have
to come to the sidebar.
(At the sidebar)
THE COURT: All I want
to be sure is you're not going to create any suggestion that this Special
K was a ripoff.
PLAINTIFF'S COUNSEL:
I'm simply going to say when he brought them the art work--
THE COURT: Toward
what--
PLAINTIFF'S COUNSEL:
Did they believe that Special K was his independent creation as well?
That's all I'm going to say.
THE COURT: What's
that got to do with this case.
PLAINTIFF'S COUNSEL:
Oh, my God.
THE COURT: There is
no contention here that this Special K was his independent creation.
Nobody contends that. Nobody. The question was whether there was the
rights to it, or there wasn't the rights to it.
PLAINTIFF'S COUNSEL:
The argument was made that this man independently created art. He said he
didn't. There is a sharp credibility issue. Counsel just urged in his
final moments of closing the same thing all over again.
THE COURT: He never
mentioned Special K board at all.
PLAINTIFF'S COUNSEL:
Of course he did not.
THE COURT: That
doesn't open it up for you.
PLAINTIFF'S COUNSEL:
You are wrong. I'll stop, but you are wrong, sir. This is an outrage. With
respect, your Honor, I apologize for the remarks, but I do believe it.
(emphasis supplied).
The foregoing
argument as to the Special K Board had been the subject of limiting
observations during the course of the trial flowing from a specific
pretrial order of Judge Preska which reads:
Having reviewed
counsel's recent letters, it is ordered that: No reference will be made in
testimony at trial to the Special K Board without prior express approval
of the Court requested at a time other than when the jury is present:
Next, in the second
summation plaintiff's counsel argued:
It's a Kemper
invoice. It's the only invoice in the case,[ [FN8]] and if you multiply
275 times their number, which is in exhibit 7 of 3,868 boards, and I'm not
suggesting for a moment that they gave us exact accurate numbers, but
that's the number that they gave it's $1,063,000 of sales what they told
you, except what we tell you this time on the numbers as if it were true,
and the reason they offered for that was: Well, we have accountants and we
have the SEC. Well, we also know that there have been instances where
individuals and corporations have made filings with the
United States
government various agencies that are not accurate.
FN8. [Footnote by the
Court]: This, as observed earlier, see supra pp. 2-3, was for the prior
year's non-Basquiat board, which plaintiff had put in evidence.
DEFENDANT'S COUNSEL:
Your Honor.
THE COURT: Sustained.
PLAINTIFF'S COUNSEL
You have heard of people engaging in a tax evasion.
THE COURT: Get away
from tax evasion. That's not in this case at all.
PLAINTIFF'S COUNSEL:
Yes, your Honor.
The foregoing
improperly and prejudicially told the jury to assess the defendant's
financial statistics in the light of whatever unspecified recollections
the jury had from newspapers or television over the years as to publicly
disseminated reportings of false filings or tax evasions.
So, finally, coming
full circle, whereas at the very beginning when plaintiff's counsel had
argued to the jury in his opening, "Unfortunately, there is no way we can
punish them but we can ask you the jury if you find that we have met our
burden to make ... " and the Court having directed the jury at the time to
disregard anything said about punishment, the jury, nevertheless,
addressed this issue during the course of its deliberations and sent the
Court a note which read in part 'Some jurors would like to know if
punitive damages are allowable?" '
It is obvious to the
Court from the totality of the foregoing: the reference to punishment; the
bald misleading statement claim about when copying was acknowledged; the
erroneous statement that the Kemper people were not there; the erroneous
statement that when Hollander talked to others at Kemper, "They did not
know anything."; the assertion that the lawyers had prepared the financial
records; the judicially-prohibited suggestion to the jury that the Special
K Board was also an infringement; and the request to the jury to draw upon
and apply in its deliberations its general awareness from the media of
others' false financial filings and tax evasions; all this led to an
unusual written expression by the jury of the desire of a number of them
to punish. All of this, even without the jury's note of confirmation,
viewed objectively, was overwhelmingly prejudicial, tainted the jury's
deliberations, and led to the grossly excessive verdict here.
Because the verdict,
in addition to the foregoing, is also based on but one non-Basquiat board
invoice, it is at a minimum against the weight of the evidence and not
rationally related. See
Taylor
v. National R.R. Passenger Corp., 868 F.Supp. 479,
484 (E.D.N.Y.1994). Accordingly, I order a new trial limited to the issues
of damages and willfulness of the infringement. This is the required
result where I conclude that " 'the jury has reached a seriously erroneous
result", Song v. Ives Labs., Inc., 957 F.2d 1041, 1047 (2d Cir.1992)
(citing Smith v. Lightning Bolt Prods., Inc., 861 F.2d 363, 370 (2d
Cir.1988)), and that the verdict was prejudicially tainted. See Pappas v.
Middle Earth Condominium Ass'n, 963 F.2d 534, 540 (2d Cir.1992). Prior to
any new trial, the parties are to exchange answers to any contentions or
other interrogatories, following which full discovery shall be made
available to both sides.
So ordered.
[end of file.]
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