A technology company developed and copyrighted a facial motion capture software system used in film production. The company’s assets, including the software, were transferred among several affiliated entities, leading to a disputed sale to a visual effects contractor. The contractor, after acquiring the assets under contested circumstances, used the software in the production of a major motion picture for a film studio. The studio’s contract with the contractor gave it broad rights to supervise the contractor’s work, including the right to terminate the contract for copyright infringement. During production, representatives of the studio were present at all relevant sessions where the software was used, and evidence was presented that copyright notices appeared during these sessions.

After the film’s release, the technology company sued the studio in the United States District Court for the Northern District of California, alleging vicarious and contributory copyright infringement. The district court granted summary judgment to the studio on the contributory infringement claim, finding insufficient evidence of the studio’s knowledge of infringement, but allowed the vicarious liability claim to proceed to trial. At trial, the jury found the studio vicariously liable, awarded actual damages, and returned an advisory verdict on profits. The district court later granted judgment as a matter of law for the studio, concluding there was insufficient evidence that the studio had the practical ability to supervise or control the contractor’s infringing conduct. The court also struck the plaintiff’s jury demand on the issue of disgorgement of profits, holding there was no statutory right to a jury trial for that remedy, and excluded certain expert testimony and evidence of an indemnification agreement.

On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s grant of judgment as a matter of law, holding that there was sufficient evidence for a jury to find the studio had the practical ability to supervise or control the contractor’s infringing conduct. The Ninth Circuit affirmed the district court’s rulings striking the jury demand on disgorgement of profits, excluding the damages expert’s testimony, and excluding the indemnification agreement. The case was remanded for further proceedings consistent with these holdings. View “REARDEN, LLC V. WALT DISNEY PICTURES” on Justia Law