Using Expert Witnesses to Prosecute and Defend Copyright Cases

Copyright cases often come down to a battle of the experts. The technical nature of proving liability and the rather complex issue of actual damages and the valuation of lost profits, makes copyright litigation a field where expert witnesses play a crucial role. Experts are routinely utilized in copyright cases for two primary reasons: (1) to prove or disprove a copyright infringement; and (2) to assess damages.

Liability: Using Expert Witnesses To Prove or Disprove Copyright Infringement

To establish a copyright infringement, a litigant must prove (1) ownership of a valid copyright and (2) copying of constituent elements of the work that are original.

Generally, plaintiffs must show that they own a valid copyright by establishing that the work was “original” and that they properly went through the formalities of the copyright process. A copyright registration certificate from the Copyright Office serves as prima facie evidence of the ownership of the copyright. A defendant seeking to rebut this presumption often seeks to do so by arguing that the work was not “original.” There is also a possibility of bringing a lawsuit even if the infringement occurs before the work was properly copyrighted.

In order to establish that a copyright infringement occurred, a litigant must also establish that the work was copied. Copying can be proved by “direct evidence” (i.e., direct proof of copying by witness testimony, defendant’s admissions or photos or video catching the defendant in the act). However, copying is more commonly shown through circumstantial evidence by establishing (1) access to the plaintiff’s work and (2) probative similarities between the works.

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Often the “highest hurdle” to get over when suing someone for copyright infringement is to establish that the defendant actually had access to the protected material. With regard to the second prong, experts are routinely used to compare the works and to establish that the works are sufficiently similar. Ultimately, the litigant must show that “the accused work is so similar to the plaintiff’s work that an ordinary reasonable person would conclude that the defendant unlawfully appropriated the plaintiff’s [protectable] expression by taking material of substance and value.” Since the standard is what an “ordinary reasonable person would conclude” experts are not always employed, however, in more technical cases, expert witnesses are used to help the jury understand the material at issue. Experts are also routinely used in connection with summary judgment motions. Litigants should be aware that when summary judgment motions amount to a “battle of the experts” courts routinely deny the motion and proceed to trial.

For an example of the use of experts in disputes over whether the two works are sufficiently “similar,” in a copyright case regarding Robin Thicke’s and Pharrell Williams’ popular song “Blurred Lines” and its alleged infringement upon Marvin Gayes’ disco classic “Live it Up” experts played a critical role. The case involved days of expert testimony about the various elements of the musical composition in “Live it Up” and whether those elements appeared in “Blurred Lines.”

Software and other technology related copyright cases are one of the hottest areas in which expert witness testimony is routinely utilized. Without it, judges and juries “are often clueless” about some of the most important issues such as: (1) how the software programs work and what they do; (2) the similarities in the two software programs, which are often at the code level; and (3) industry design standards, programming techniques, hardware constraints, compatibility requirements and other relevant tech-industry issues that the lay-juror or even Judge is unlikely to have sufficient knowledge of without the expert.

For example, a jury recently awarded a $500 million verdict for a company that sued Palmer Luckey (and by extension the virtual reality company Oculus which was purchased by Facebook) for copyright infringement, as well as violating the terms of a non-disclosure agreement and false designation. The critical testimony in the case was that of the plaintiff’s expert witness. In that regard, after the verdict, the former Chief Technology Officer offered his unhappiness with the plaintiff’s expert’s testimony and, more specifically, with the expert’s opinion that the former CTO had copied software code. The plaintiff’s expert testified that he was “absolutely certain there was non-literal copying” in several cases. The CTO claims that he was “offended” that the expert would characterize being “absolutely certain” of anything when it comes to something like textual analysis of his codebase. Despite the CTO’s post-verdict rebuke of the expert’s testimony, it is clear that the plaintiff’s expert was a critical piece of evidence that led to a $500 million verdict.

A critical issue is also the “fair use” affirmative defense. If the infringer can establish that the use of the copyrighted work was for “purposes such as criticism, comment, news reporting, teaching . . . , scholarship, or research” then such use is “not an infringement of copyright.” Experts are often used to help establish whether or not the use of the copyrighted material was “fair use.”

Damages: Using Expert Witnesses To Valuate Damages

For many businesses, their intellectual property can be considered the most valuable property that it owns. In copyright litigation, successful plaintiffs are entitled to recover actual damages and any of the infringer’s profits that are not taken into account in computing the actual damages.

Actual damages are the amount of money adequate to compensate the copyright owner for the reduction of the fair market value of the copyrighted work caused by the infringement. The fair market value analysis requires a litigant to go back in time and to determine the amount that a willing buyer would have purchased the copyrighted material before the infringement. The analysis also incorporates lost license fees that the copyright holder may have made absent the infringement. This is no easy task. In this regard, experts are routinely employed to establish the fair market value of the copyrighted work in the first place, as well as the resultant diminishment of that fair market value caused by the infringement. This analysis generally includes taking into consideration previous compensation, royalties and licenses for the copyrighted work or similar work. The most typical experts in this area are accountants, those with experience in licensing in that particular industry and other appraisers or persons with experience in valuing the product or intellectual property at issue.

With regard to the profit analysis, the plaintiff looks to the gross revenues of the infringer and seeks to establish the portion of those revenues that are “attributable to the infringement.” Plaintiffs in this area often seek to recover “indirect” profits as well which include other profits earned by the infringer’s operations that were enhanced by the infringement.

In response, “the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.” Generally speaking, variable expenses such as labor, raw materials and other costs are fairly deductible, while fixed operating costs are not. In this regard, experts are often employed to testify as to which expenses are properly “deductible” from the gross revenue of the infringer.

These are highly technical issues which call for experts in economic valuations as well as the particular industry at issue. Also, an early estimation by an expert as to what the damages could be would also enable litigants to make informed decisions with regard to pre-trial settlements and could lead to “win-win” settlements for both parties.

Expert witnesses can make or break a copyright case. These sorts of cases are often hotly litigated and very technical which heightens the need for expert witnesses on the critical issues of liability and damages. Many copyright cases come down to a battle of the experts and plaintiffs and defendants would be well-served in seeking expert opinions early and often.

Joseph B. Evans focuses his practice on the defense of Federal and New York State criminal and regulatory inquiries and the prosecution of complex litigation matters. He is an associate at Gage Spencer & Fleming LLP, a trial law firm well known for defending the nation’s most high-profile white-collar criminal cases from inception to verdict.