The opinion of the court was delivered by: Honorable Joan B. Gottschall
MEMORANDUM OPINION AND ORDER
Plaintiff Flava Works, Inc. filed this action against TyRon Wyche, the owner and operator of two websites DGSource.com and LookLurk.com, and five "John Does." Flava Works alleges that Wyche established the websites as forums for the exchange of copyrighted material. According to the complaint, Wyche, the John Does, and others reproduced and distributed through the websites pornographic videos and photographs created by Flava Works. The complaint asserts claims for infringement under the Copyright Act, 17 U.S.C. §§ 106 & 501, and false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a).
Although Wyche was served with process, he never appeared nor answered the complaint. The court issued an order of default on May 5, 2010 and permitted plaintiff to submit its proof of damages. (Minute Entry 5/5/10, Doc. 18.) Flava Works filed its proof seeking statutory damages under the Copyright Act, 17 U.S.C. § 504, actual damages and defendant's profits under the Lanham Act, 15 U.S.C. § 1117(a), costs, attorneys' fees, and injunctive relief. (Pl.'s Prove Up, Doc. 19.) In all, Flava Works claims that Wyche infringed two copyrighted works and two works with pending copyright applications, and it asks for $1,381,310 in monetary damages.
Based on the record before the court, default judgment cannot be entered until Flava Works supplements the information it has provided.
"There are two stages in a default proceeding: the establishment of the default, and the actual entry of a default judgment. Once the default is established, and thus liability, the plaintiff still must establish his entitlement to the relief he seeks." In re Catt, 368 F.3d 789, 793 (7th Cir. 2004). Where a plaintiff seeks liquidated damages, the court may enter default judgment immediately upon the plaintiff's request and submission of an affidavit showing the sum certain. Fed. R. Civ. P. 55(b)(1). Rule 55 requires the court to conduct a more thorough inquiry where damages are unliquidated. The court will not simply deem as true the complaint's allegations with respect to damages. Catt, 368 F.3d at 793. The plaintiff must meet its burden-although the burden need not be high-to prove damages that are reasonably certain. See Charles Alan Wright et al., 10A Federal Practice and Procedure § 2688 (3d ed. 1998). And the court must carefully consider whether plaintiff has demonstrated the inadequacy of legal relief before issuing an injunction. e360 Insight v. Spamhaus Project, 500 F.3d 594, 604 (7th Cir. 2007).
Flava Works has requested damages for both its copyright and false designation claims. However, the complaint alleges a single course of conduct which gave rise to the two causes of action. Flava Works is entitled to a choice between either statutory damages or actual damages plus Wyche's profits, 17 U.S.C. § 504(c)(1), but it may not be compensated twice for the same injury. See Roulo v. Russ Berrie & Co., Inc., 886 F.2d 931, 940-41 (7th Cir. 1989) (holding single award of damages is appropriate where claims under Lanham Act and Copyright Act seek compensation for same conduct).
If Flava Works opts to receive its actual damages, under the Copyright Act, it would be entitled to receive both the damages incurred by it as a result of the infringement as well as the profits earned by Wyche that are attributable to the infringement. 17 U.S.C. § 504(b). The Lanham Act generally provides the same measure of damages for false designation claims; however, the court has discretion to increase the amount of actual damages "not exceeding three times such amount." 15 U.S.C. § 1117(a).
Flava Works calculates its damages by estimating that, because of the infringement, it lost out on DVD sales, purchases of its Video on Demand service, and new members to its subscription-based websites. As proof, Flava Works submitted the affidavit of Phillip Bleicher, the company's president and owner. The affidavit states:
7. That, due to TyRon Wyche's activities via his websites, Flava Works, Inc. has lost approximately 150 DVD sales per title for the four (4) DVDs . . . and that each of these DVDs sells for a retail price of $54.95 per DVD, totaling $32,970.
8. That Flava Works, Inc. has also lost revenue amounting to approximately half of the total lost DVD sales from the loss of revenue from its dissemination of these DVD titles via ...