Fourth Circuit Gives Mayweather a Knock-Out on Flawed Damages Evidence
Undefeated welterweight boxer Floyd Mayweather, Jr. has added to his string of victories, with his most recent win coming from the Fourth Circuit in the decision Dash v. Mayweather. In its decision, the Fourth Circuit provided noteworthy guidance to copyright litigants regarding the sufficiency of expert damages testimony.
In 2009, Mayweather was sued by music producer Anthony Lawrence Dash. Dash claimed copyright violation arising out of Mayweather’s purported use of a variant of Dash’s instrumental song “Tony Gunz Beat” as an entry anthem at two WWE events in 2008 and 2009.
Dash filed his copyright infringement suit in the U.S. District Court for the District of South Carolina. That court bifurcated the proceedings with respect to liability and damages and addressed the issue of damages first. At the request of the district court, Mayweather filed a motion for partial summary judgment concerning Dash’s entitlement to damages.
In Dash’s response to the motion for partial summary judgment, he relied heavily on the expert report of Dr. Michael Einhorn, who addressed both the actual damages and lost profits claimed by Dash. Einhorn concluded that Dash was entitled to “no more than $3,000” in actual damages and more than $1 million in lost profits.
As to actual damages, the district court found a lack of evidence of any market value of “Tony Gunz Beat” in light of the fact that Dash had never before sold any of his music. As to lost profits, the district court found that Dash had failed to present evidence demonstrating a causal link between the alleged infringement and enhancement of any revenue stream claimed by Dash. In the absence of evidence indicating Dash was entitled to any damages, the court granted summary judgment to Mayweather on damages and instructed that the case would not proceed on the liability phase.
The Fourth Circuit affirmed, focusing on numerous flaws in Einhorn’s damages report. In order “to aid plaintiffs and their experts going forward,” the Fourth Circuit enumerated multiple evidentiary defects contained in the Einhorn report. In particular, the Court took issue with Einhorn’s use of benchmarks to establish actual damages. The Court noted that Einhorn failed to explain how he selected four benchmark licenses cited in support of his estimation of the song’s maximal value and how such factors recommend selection of the specific benchmarks. The Court also took issue with Einhorn’s failure to account for any impact on the claimed damages of Dash’s acknowledgment that the song actually played by Mayweather at the WWE event was a new derivative work purportedly based on Dash’s song.
Using the Mayweather decision as a guide, copyright claimants would be well-advised to include in their damages reports a significant amount of detail regarding their experts’ methodologies, includinghow and why certain benchmarks are selected, and whether differences between the benchmarks used and the copyrighted material at issue have been accounted for. Copyright litigants should likewise take note of Mayweather’s successful strategy of litigating damages prior to liability as a means of resolving the entire case without reaching the merits of the infringement claims.