Do not rely on what's below. See binder for hand-written notes. This is the rough draft of the brief only.
US Naval Institute v. Charter Communications
US Ct. of Appeals, 2nd circuit, 1991.
936 Fd 692
Procedural history: P=Naval
D=Berkley (Charter owns?)
From the S Ct, P wants "fashioning of relief in favor of P for BOC regarding a paperback edition of The Hunt for Red October.
-2nd time in front of US S Ct
-1st time: S Ct awarded $35,380.50 in damages and $7,760.12 in profits wrongly received by D
-S Ct remanded for entry of judgment, giving P appropriate relief
-D now appeals for more profits
-P cross-appeals as a whole (appeals both profit and damages awards)
Facts:
-P was given rights to book's copyright
-Enters licensing agreement w/ P, Sept. 1984 to allow to publish paperback edition NOT sooner than Oct. 1985
-P sends editions to retail outlets too soon (mid Sept) putting outlets in postion to sell by end of Sept.
-As a result, sales started Sept. 15, 1985. So successful, book was on best seller list by end Sept.
-P. started this suit when it learned of P's plans for early shipment and sought (but failed) to get an injunction to stop the early sale
*Basis of judge's decision= found defendant did not BOC b/c it was entitled, according to industry custom, to ship prior to the agreed pub. Date
-On the remand, P sought all of D's profits from pre-October sales of book (citing copyright infringement), est. to be worth $724,300.
*D. said no way to copyright infringement said at very most, P had a breach of contract. D also said profit figure was inflated.
-DC judge said P gets:
1. Damages for copyright infringement for actual damages suffered
2. Amount of profit D earned that is attributable to the infringement
-Actual damages were calculated as what P would have earned (prior to the paperback, P's hardcover was the only copy to buy). But there was a dip in the hardcover book market from 3/85 to 8/85 and the court used the average sales as a predictorà$35,380.50 figure
-"Attributable to the infringement" amount was calculated by profits that resulted from sales to ppl. who would not have bought the hardcover edition in Septà$7,760.12 figure
Issue:
Breach of contract or Infringement of Copyright and amount of damages for both
Rules:
Ct. awards the amound of D's profits to P as loss when that figure reflects the actual loss. Here, D's profits greatly exceed P's loss, no tort was committed. Punitive damages are not allowed in the law of contract damages.
*(Contract law is compensatory, not punitive—re: Restatement of Contracts, sect. 356 comment A… comment B: "unefforceability of imposing huge amount in damages (as a penalty?")
*Unless a tort exists, punitive damages are not recoverable under contract law
Analysis:
-In assessing how actual damages figure was calculated, S Ct uses "clearly erroneous" std. of review and find against P's contentions (1st ½ September sales instead)
-S. Ct concludes early shipment did haven an effect on hardcover sales based on end-of-year figures
-S Ct agrees the DC was correct in using Aug sales and also agrees that in terms of damages, ct. should err on side favorable to injured party. Further, D did not provide evidence in the record to prove that sale of books is spread out evenly over the month. (D even admits the industry sales unpredictability in its brief)…S Ct cannot DC's calculation was erroneous.
Conclusion:
P is not entitled to profits (infringement)—original holding reversed. P. is entitled to damages ($35K figure)
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Economics of Remedies: Sullivan v. O'Connor
-P awarded $13,500 for BOC regarding P's nose
-P's declaration against D consisted of 2 counts
1. contract to make beautiful unfulfilled
2. negligence (conventional medical malpractice)
-Agreement was as P put it in declaration (both sides agree)
-P did not demonstrate to jury that P lost job due to surgery
-P agreed $622.65 in contract for D's fee and hospital expenses
-3 hospitalizations total for P (only two were stipulated as part of the original agreement
Is the arrangement between P and D as enforceable as a commercial contract?
-According to DC judge, P could collect her out-of-pocket expenses for all operations
-Also could collect damages flowing directly from D's breach of promise
-P could collect pain and suffering for 3rd surgery but not first two
-No proof any lost wages of P so can't be in damages calculus
-In commercial BOCs, P gets compensatory damages or restitution damages
-formula also applies if operations had neither worsened or improved, but $ value would be less
-Absence of negligence and malice (acting in good faith) is NOT a defense for BOC
-Pain and suffering is OUT because P would be suffering even if surgery was a suggest
-Third surgery is IN b/c if doctor had done what he said he would
Restitution seems too meager in these kinds of cases, but expectancy recovery may be too excessive.
Logic: suffering is worthless if treatment fails
Look at three different ways of looking at damages:
- Expectation (assign damages as what P wanted)
- Reliance (assign damages as what it would take to return P to original form)
- Restitution (compensation equal to what D made/gained)
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UCC definition: the total legal obligation which results from the parties' agreement
Two fundamental assumptions when the law attempts to enforce something.
- Law strives to relieve the promises of what was lost ("redress the breach" via a "remedy") and not punish the defendant "just 'cause"
- Relief granted to the aggrieved party should generally protect promisee's expectation of what they (expected) when they entered the contract in the first place [where the promisse would have been had the K not been breached]
"Restatement" is not the law but most states have adopted significant portions of it.
-Designed to standardize law governing commercial transactions.
UCC covers sales. Common law cover services.
Contract law is "private law." Private ordering.
Why should the law enforce contracts?
3. Promote good faith and fair dealing in the community.
-element of "predictability" consumers can expect certain results in normal transactions
- Give something to get something (bargained for exchange)…quid pro quo
- Legal transaction—no selling things that are illegal (drugs, organs)
- Kidney hypo: X agrees to sell kidney to Y for $25K. This is an invalid contract. It's not legal to sell kidney so no contract can exist. It's a good bargain, yes, but it's an invalid contract.
- Seller defaults on deliver of 1 tractor out of 5 in an agreement. Will the law enforce the contract? Yes. The law will otherwise the law effectively endorses theft and fraud. "Good faith and fair dealing."
- Z agrees to build solid brick house. Z uses brick veneers instead. Enforceable? This is a service issue but specifically, an issue of materials (when hybrid problems like this comes up, ct decides which is the dominant issue). Z dominately was to build, not sell brick, therefore a services contract exists and governed by common law.
Look at three different ways of looking at damages:
- Expectation (assign damages as what P wanted)
- Reliance (assign damages as what it would take to return P to original form)
- Restitution (compensation equal to what D made/gained)
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