Rearden LLC v. The Walt Disney Company

District court grants renewed motion for judgment as matter of law on vicarious copyright infringement claim, finding that plaintiffs failed to introduce sufficient evidence at trial for reasonable jury to conclude that defendants had ability to identify, and therefore police, infringing conduct underlying claim. 

Plaintiffs Rearden LLC and Rearden MOVA LLC brought claims of contributory copyright infringement, vicarious copyright infringement, trademark infringement and patent infringement against Walt Disney Pictures concerning the use of computer-graphics motion capture technology (MOVA) in movies including Guardians of the Galaxy, Avengers: Age of Ultron and Beauty and the Beast. Rearden alleged that each time Digital Domain 3.0, Inc. (DD3) used MOVA, DD3 infringed on Rearden’s copyright and that Disney was contributorily and vicariously liable for this conduct because Disney contracted with DD3 for DD3 to provide facial capture services using MOVA to create computer graphics characters in these movies. Before the case went to trial, all of Rearden’s claims against Disney were dismissed except for Rearden’s claim that Disney was vicariously liable for DD3’s copyright infringement when Disney contracted with DD3 to use MOVA to animate the Beast character in Beauty and the Beast. Prior to the jury’s verdict, Disney filed a motion for judgment as a matter of law on the ground that Rearden did not present legally sufficient evidence that a reasonable jury could find that: (i) Rearden owned the MOVA copyright at any point during DD3’s alleged infringement in this case; (ii) Disney had the practical ability to control DD3’s alleged infringement; (iii) Disney directly financially benefited from DD3’s alleged infringement; (iv) there was a causal nexus between DD3’s alleged infringement and Disney’s revenue from Beauty and the Beast; and (v) Rearden suffered any actual damages as a result of the infringement. The court denied this motion.

At trial, the jury awarded actual damages of $250,638 and an advisory verdict that Disney’s profits attributable to the infringement amounted to $345,098. After the jury returned its verdict, Disney renewed its motion for judgment as a matter of law. The court found that Rearden presented sufficient evidence for a reasonable jury to find that (i) Rearden owned the MOVA copyright at the time of DD3’s alleged infringement and (ii) there was a causal relationship between DD3’s usage of the MOVA software and any direct financial benefit to Disney. The court further found that the actual damages award was within an acceptable range of evidence and not so speculative as to warrant judgment as a matter of law. The court also rejected Disney’s argument that there was insufficient evidence to find a causal nexus between DD3’s infringement and its profits from Beauty and the Beast: because this issue was tried to the court in a bench trial, it was not proper on a motion for judgment as a matter of law. 

With respect to whether Disney exercised the requisite control over DD3 with respect to the infringement, however, the court found that Rearden did not present sufficient evidence that Disney had the practical ability to identify, and therefore supervise or control, whether DD3 was infringing copyright through the use of proprietary software. Rearden did not introduce any evidence to show that any Disney representative was involved in the actual animation process using MOVA, such that Disney would have been in a position to identify infringement of the kind at issue—namely, the use of software without the copyright owner’s permission. Moreover, Disney lacked the ability to review the hardware or software used by its vendors, investigate competing ownership claims in the underlying intellectual property, and determine whether certain software infringed another’s copyright. Because the court found that Rearden failed to introduce legally sufficient evidence for a reasonable jury to find in its favor as to vicarious copyright infringement, the court granted Disney’s motion for judgment as a matter of law.

Summary prepared by Safia Gray Hussain and Jennifer Kahn