Page:Sid & Marty Krofft Television Productions v. McDonald's Corporation.pdf/20

 whether plaintiffs are entitled either to (1) the greater of either damages or profits, or (2) both damages and profits. Courts have been unable to agree on this question. This disagreement has its roots in the conflict between the statutory language, which appears to contemplate a cumulative recovery, and the legislative history, which indicates that Congress envisioned an alternative recovery. This circuit in Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354 (9th Cir. 1947) expressly adopted the alternative recovery, and we are constrained to follow that decision here.

It has been argued that the Supreme Court’s decision in F. W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 73 S.Ct. 222, 97 L.Ed. 276 (1952) and this court’s interpretation of that decision in Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d 236 (9th Cir. 1966) overruled, sub silentio, Universal Pictures. We disagree. Both Woolworth and Shapiro dealt with the related question of the propriety of “in lieu” damages in certain factual situations; neither squarely confronted the question of cumulative versus alternative recovery.

To illustrate, in Woolworth the district court had awarded “in lieu” damages in the face of ascertained, albeit small, profits and substantial but unproven damages. The Supreme Court affirmed this award for two reasons: (1) to compensate the copyright owner for injury when proof of such injury is difficult or impossible, and (2) to discourage wrongful conduct. In the context of this holding the Court used the following language, which it has been argued, demonstrates that it favors cumulative recovery. "[A] rule of liability which merely takes away the profits from an infringement would offer little discouragement to infringers. It would fall short of an effective sanction for enforcement of the copyright policy. The statutory rule, formulated after long experience, not merely compels restitution of profit and reparation for injury but also is designed to discourage wrongful conduct."

344 U.S. at 238, 73 S.Ct. at 225.

When read in light of the issue before the Court, viz. the propriety of “in lieu” damages, this passage does not indicate that cumulative recovery is required to discourage infringement, but rather that the threat of “in lieu” damages should exist to serve as a deterrent to future infringement. The remainder of the quoted passage further evidences the thrust of the Court’s opinion. "The discretion of the court is wide enough to permit a resort to statutory damages for such purposes. Even for uninjurious and unprofitable invasions of copyright the court may, if it deems it just, impose a liability within the statutory limits to sanction and vindicate the statutory policy."

Id.

The fact that “a rule of liability which merely takes away the profits” is an