DAMAGE AWARD AGAINST ABSENT DEFENDANTS UPHELD
(This is an archived case summary.)
The defendants, NTDEC and Megasoff Inc., appealed a default judgment issued by the District Court to Nintendo on the basis of copyright and trade-mark infringement. The defendant corporations were owned by five men from Taiwan. These corporations manufactured, imported and sold pirated Nintendo games in the United States, South America and Asia. After numerous attempts to gain access to various documents through the discovery process, the Court gave the defendants one last chance to cooperate, then issued default judgment. The defendants did not attend the default judgment. The default judgment awarded Nintendo $24M in damages and a little under $110,000 in attorneys' fees.
On appeal, the defendants raised various grounds of appeal, as well as various reasons why damage award should be lowered. The defendants also attempted to raise technical issues regarding the method in which documents were served upon them, including the incorrect placement of signatures. The Court determined that the defendants' failure to attend any of the hearings and argue on their own behalf was solely attributable to their own behaviour and was not a flaw in the service of documents.
With respect to the damage award, the defendants raised an argument based upon Title 15, section 1117 of the U.S. Code, which states that defendants must prove all elements of a cost or deduction claimed in regard to a trade-mark infringement award. Damages awarded for copyright infringement were statutory damages of up to $100,000 per infringement. The defendants argued that their inability to raise a defence restricted them from being able to demonstrate the costs involved in manufacturing these infringing products and thus that the damage award was inflated.
The Court of Appeal held that there were no grounds upon which to set aside the default judgment, nor were there any compelling reasons to alter the damage award. There is no record of whether Nintendo was able to collect the award.
Nintendo of America, Inc. v. NTDEC