under the statute that the only person who may bring an action is the person who applies for the copyright registration. The law merely provides that there must be registration of the copyright claim, pursuant to the Copyright Act, before an action may be instituted. 17 U.S.C. § 411(a). Thus, this court holds that Tang has established his ownership interest in a valid copyright and has standing to bring the action for copyright infringement for KBS and MBC videos, both those for which Tang's counsel submitted applications and received copyright registrations, and those which are evidenced by the applications submitted by Dae Han.
Defendants argue that the settlement between the defendants and plaintiff Dae Han before the preliminary injunction hearing closes off any recourse that Tang may have against the defendants. This settlement does not change the agreement Tang has with Dae Han, and thus Tang still may enforce his exclusive rights. Tang's right to enforce the exclusive sublicense is based on the United States copyright law and is not prohibited under the agreement with Dae Han.
Tang must also establish an interest in a valid copyright as to the SBS tapes in order to maintain his claims based on infringement of the copyrights in those tapes. The documents and testimony relating to the agreements between the Presidents of SBS and of SBS USA, between Sang Yul Chun and Seoul Video Production, and between Seoul Video and Tang establish a proprietary right through a chain of title. Defendants contest the nature and extent of the agreement that existed between SBS and SBS USA, but according to the testimony SBS USA President Sang Yul Chun, SBS granted Sang Yul Chun the power, among other things, to secure copyrights on the SBS video productions from Korea. This power, according to Chun, is derived from the contract between SBS and SBS USA, written only in Korean, and the Power of Attorney granted to Sang Yul Chun by SBS.
Seoul Video granted Tang "the exclusive rights" to reproduce and distribute, and this Court finds that these rights are enforceable under the Copyright Act against alleged infringers.
Tang has also met the registration requirement. There is evidence of applications made by both SBS USA and Tang for registrations.
In addition, Tang received, and provided to the court, the copyright registrations for the applications it submitted.
Defendants argue that Tang acted outside of his authority under his agreement with Seoul Video by filing copyright applications for the SBS tapes.
However, Tang's agreement did give him exclusive rights to reproduce and distribute the tapes. As "owner" of these exclusive rights, Tang is permitted under the Copyright Act to submit applications. 37 C.F.R. § 202.3(c)(1).
Thus, Tang may bring a copyright infringement action on those SBS tapes for which Tang submitted applications and received copyright registrations as well as those for which SBS USA submitted applications.
Defendants contend that Tang is barred from claiming infringement as to the SBS copyrights under the equitable doctrine of "unclean hands" because of Tang's refusal to sell SBS tapes to the defendants. The doctrine of unclean hands applies to bar a claim only if "(1) a party seeking affirmative relief (2) is guilty of conduct involving fraud, deceit, unconscionability, or bad faith (3) directly related to the matter in issue (4) that injures the other party and (5) affects the balance of equities between the litigants." Castle v. Cohen, 676 F. Supp. 620, 627 (E.D. Pa. 1987), aff'd in part and remanded in part on other grounds, 840 F.2d 173 (3d Cir. 1988). The "unclean hands" doctrine has been recognized in this circuit as applicable to copyright infringement actions. Testa v. Janssen, 492 F. Supp. 198, 201 (W.D. Pa. 1980). In Testa, Judge Ziegler found that the plaintiff's misrepresentation on a copyright application as to authorship of a song was not a bar to the infringement action. No prejudice had accrued to the defendants and the transgression in no way affected the validity of the plaintiff's copyright. Id.; and see Williams v. Arndt, 626 F. Supp. 571, 578 (D. Mass. 1985).
Here, Tang's refusal to sell the SBS tapes was a response to defendants' copy, rental and sale of tapes acquired from the Maryland dealer. Defendants contend that Tang's action harmed them in that they had to obtain SBS tapes from elsewhere and were thus forced into violating Tang's exclusive distributorship in the SBS tapes. There is, however, no statutory requirement that Tang, as the holder of an exclusive ownership interest in a copyright, has to rent, sell or distribute the works in which he has an interest. While defendants may have been harmed by the inability to purchase the SBS tapes from Tang, they should not now blame Tang for their subsequent decision to infringe on his exclusive rights in those tapes.
Tang seeks preliminary injunctive relief and impounding pursuant to 17 U.S.C. §§ 502(a) and 503(a). When ruling on a motion for preliminary injunctive relief, the district court must consider four factors: (1) the likelihood that the applicant will prevail on the merits at the final hearing; (2) the extent to which the plaintiffs are being irreparably harmed by the conduct complained of; (3) the extent to which the defendants will suffer irreparable harm if the preliminary injunction is issued; and (4) the public interest. S & R Corporation v. Jiffy Lube International, Inc., 968 F.2d 371 (3d Cir. 1992) (citing Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 197-83 (3d Cir. 1990)). All four factors should favor preliminary relief before the injunction will issue. Id. The same "likelihood of success" standard adopted in preliminary injunction cases is applicable to requests for impounding. WPOW, Inc. v. MRLJ Enterprises, 584 F. Supp. 132 (D.D.C. 1984).
As to the likelihood of success on the merits with regards to the KBS and MBC tapes, the videotapes
obtained from the defendants as well as the stipulation of counsel at hearing establish that the defendants did copy the videotapes. Along with establishing that defendants have copied the copyrighted works without Tang's permission, Tang has also established his exclusive interests in the valid copyrights on the SBS, KBS and MBC video tapes. A prima facie case of copyright infringement is demonstrated where the plaintiff has shown (1) an exclusive ownership right in a valid, existing copyright and (2) copying or other use of the copyrighted material by the defendant without the plaintiff's approval. See, e.g., Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. 1983), cert. dismissed, 464 U.S. 1033 (1984); Georgia Television v. TV News Clips of Atlanta, 718 F. Supp 939, 946 (N.D. Ga. 1989). By establishing the elements of a prima facie case, Tang has demonstrated a likelihood of success on the merits.
Once the copyright holder has made out a prima facie case of infringement, irreparable injury is presumed. Apple Computer, Inc., 714 F.2d at 1254.
The balance of hardships factor also weighs in favor of the issuance of a preliminary injunction as to the KBS, MBC and SBS tapes. The testimony evidences that Tang is losing a large portion of its business. In addition, Tang also bears the expense of royalty payments made to Dae Han. Should there be some harm to the Defendants' business resulting from an injunction, it is insufficient to require a denial of the preliminary injunction. In a proceeding on a motion for preliminary injunction where the plaintiff has made a prima facie showing of copyright infringement, a preliminary injunction should not be denied merely because of the potential destruction of defendants' businesses. Georgia Television, 718 F. Supp. at 949 (cites omitted). If that were the correct standard, then a knowing infringer would be permitted to construct its business around its infringement, a result the Courts cannot condone. Apple Computer, Inc., 714 F.2d at 1255. Any harm to defendants is far outweighed by the damage done to Tang by the infringement of its exclusive rights in the copyrighted videos. See S & R Corporation v. Jiffy Lube International, Inc., 968 F.2d 371.
With regards to the public interest in the preliminary injunction, "it is virtually axiomatic that the public interest can only be served by upholding copyright protection and, correspondingly, presenting misappropriation of the skills, creative energies, and resources which are invested in the protected work." Apple Computer, Inc., 714 F.2d at 1255 (citing Klitzmer Industries, Inc. v. H.K. James & Co., 535 F. Supp. 1249, 1259-60 (E.D.Pa. 1982)).
Tang, as the moving party for the preliminary injunction, has met its burden of showing (1) its reasonable probability of eventual success on the merits; (2) that irreparable injury will occur if injunctive relief is not granted; and (3) the harm to the moving party outweighs the potential harm to the nonmoving party and the general public.
The Court will grant Tang's motion for a preliminary injunction and for impoundment.
PRELIMINARY INJUNCTION AND ORDER
AND NOW, this 13th day of July, 1992, for the reasons set forth in the foregoing Memorandum, it is ORDERED that:
1. The Motion of Plaintiff Hung Tang, d/b/a Hyun Jin's Video (hereinafter Hung Tang) for a Preliminary Injunction is GRANTED.
(a) Defendants, Ho Yong Hwang d/b/a Ko Ba Woo Video; Jung Hun Nam d/b/a Han A Rum Video; Jang Hee Lee d/b/a Korean Video Rental; Kyung Park d/b/a Ga Go Pa Food Market; Myong Ja Kim d/b/a Dan Kol Oriental Market; Jung Hi Lee d/b/a Lotte Oriental; Man Su Ha d/b/a Treon's Cut Rate; Won Chang Choi d/b/a Asian Food Market; and Soon Hwa Kang d/b/a Koa Video; and their officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them are hereby preliminarily enjoined, until a final hearing, from infringing the copyrights of Korean Broadcasting System ("KBS"), Munwha Broadcasting Company ("MBC"), and Seoul Broadcasting System ("SBS") for which plaintiff Hung Tang has exclusive distribution rights in Pennsylvania, South Jersey, and Delaware.
2. Plaintiff Hung Tang is entitled to an impoundment, pursuant to 17 U.S.C. § 503(a), and the motion for impoundment will be granted upon the submission by plaintiff Hung Tang to the Court of a proper Form of Order and Writ of Seizure providing with specificity as to each defendant what videocassettes and other articles are to be seized and impounded, and the date and time such seizure is to take place, after consultation with the United States Marshall.
3. The Motion of Plaintiff Hung Tang for attorney fees and costs incurred in connection with the Motion for Preliminary Injunction is DENIED.
BY THE COURT:
Harvey Bartle, III