CLEVELAND—On Monday, U.S. District Judge Solomon Oliver Jr. issued his final order in the case of Studio A Entertainment v. Action DVD, et al. and it was a doozy.
Judge Oliver had previously granted summary judgment to Studio A in January, finding the counterclaims by retailer Action Software and its owner, Alexander Belfer, to be without merit, and awarded Studio A $15,750—the statutory minimum—for the 21 Andrew Blake titles that Action had illegally sold.
But the Sept. 28 order for attorneys' fees was the real attention-getter. Judge Oliver awarded Studio A's attorney Jules D. Zalon a whopping $173,368.96 in fees and costs, in large part because of the fact that shortly after the lawsuit was filed, Action had agreed to settle with Studio A for just $20,000, but on the day the settlement was to be signed, Action reneged and hired a new attorney who, according to Zalon, "embarked on a scorched earth litigation policy."
"The next two years or so was taken up with my filing motion after motion, seeking to discover exactly what business they may have done," Zalon told AVN. "And the dumb thing is that had they given me the requested information in the first place, rather than requiring four separate court orders, I would have moved for summary judgment immediately, since their liability was so obvious. But in addition to busting my chops, they also filed two dozen of their own motions, almost all of which were frivolous and denied."
Indeed, Action had argued that the pirated DVDs it had sold were not bootleg copies and claimed that Studio A had offered no evidence to show that the disks were unauthorized. Trouble is, the plaintiffs had submitted affidavits and testimony from Blake's wife (and Studio A's co-owner), Carol, as well as from the company's replicator and the graphics company that prints the package inserts for Studio A's DVDs, all of whom testified that there were vast and obvious differences between the legitimate titles and the disks which were in the possession of Action Software.
The defendants also claimed that they had not been properly served with the complaint, and made contradictory statements in legal filings as to whether they had been aware that the copies they were selling were pirated.
In all, 195 documents were filed in the case, many of which Judge Oliver characterized as "frivolous and objectively unreasonable arguments" by the defendants—a factor that apparently was important in the judge's decision to grant the attorneys fees.
"This suit was initiated in 2005, lasting over four years, for what amounted to a relatively small damage award based entirely on the Copyright Act’s provisions governing damages," Judge Oliver wrote. "The parties were engaged in settlement discussions early in the litigation, and according to Zalon, they reached a tentative settlement for approximately the statutory damage amount. The settlement discussions eventually concluded without agreement, which Zalon contends was because of Defendants' refusal to agree to this amount... The court finds this conduct unreasonable in light of the provision of the Copyright Act detailing damages and their apparent knowledge throughout the litigation that the DVDs were unauthorized copies. An award of fees and costs against Defendants, in this case, would deter others from continuing to litigate and not engaging in good faith negotiations where liability is conceded and the amount of damages are prescribed by statute."
Indeed, Zalon submitted records showing that he had devoted well over 400 hours to the case, at an hourly rate that was significantly less than that of other attorneys with similar experience and expertise in copyright law. Judge Oliver found that Zalon's submissions were entirely reasonable, awarding him $139,449 in fees and $33,919.96 in costs.
"Clearly, they [the defendants] expected that they would simply outlast me—something, believe it or not, they actually admitted in a filed brief," Zalon said. "That was a very big mistake, since the Copyright Act provides for a discretionary award of reasonable attorneys fees to the prevailing party. And the judge awarded every penny we sought."
"The importance of this case is that it should encourage attorneys to take copyright infringement cases that do not have great potential for large damage awards," Zalon continued, "since the amount at issue is completely separate from what a court will award as fees, should they be successful. It should also act as a warning to recalcitrant infringers, who think that if they bust the plaintiff's chops, they will go away."
Zalon's work on the case also helped uncover what has become known as the "Canadian Pipeline" of bootleg adult DVDs, and it was that pipeline which was targeted in the Evil Angel/Jules Jordan piracy case in 2007, which produced a multimillion-dollar verdict for those companies.
