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Judge Gross Rules on Cross-motions for Summary Judgment in SuperMedia Adversary Proceeding

By Amara Nwannunu

On October 27, 2015, Judge Kevin Gross, of the United States Bankruptcy Court for the District of Delaware, ruled on cross-motions for summary judgment in an adversary proceeding between SuperMedia, LLC (the “Debtor”) and Yellow Pages Photos, Inc. (“YPPI”).  The ruling is the latest development in litigation over the Debtor’s transfer of YPPI’s copyrighted material.  While the Court held in favor of the Debtor on statutory damages and attorneys’ fees, a trial will go forward on whether YPPI sustained actual economic loss.

The Court previously held a trial determining the Debtor’s liability for an administrative expense claim filed by YPPI.  There, the issue was whether the Debtor “breached a license agreement and committed copyright infringement during the 43 days between the date of [the Debtor’s] bankruptcy petition and the effective date of its confirmed plan, i.e., between March 18, 2013 and April 30, 2013 (the ‘Administrative Claim Period’).”  In re SuperMedia, Inc., 2014 WL 7403448 (Bankr. D. Del. 2014).  In a post-trial opinion, the Court found the Debtor liable for infringement of certain images of YPPI that the Debtor transferred to ASEC Group LLC and others, in 2009, and later to bieMedia, LLC.  The damages portion of the bifurcated trial was scheduled for September 2015.  The Debtor moved for summary judgment ahead of the damages trial, maintaining that its infringing conduct occurred between 2005 and 2006, but that YPPI did not register the subject images with the Copyright Office until 2007.  The Debtor thus argued that YPPI was barred, under 17 U.S.C. § 412(2), from seeking statutory damages and attorneys’ fees.  Pointing to the Court’s findings in the liability trial, YPPI argued that the Debtor was collaterally estopped from relitigating the dates of the transfers.  The Court rejected YPPI’s collateral estoppel argument, stating that the 2005 – 2006 prepetition period was not “actually litigated” in the liability trial, which involved the March – April 2013 administrative claim period.  Since the Debtor’s first infringing act occurred before the copyright was issued, section 412(2) barred statutory damages for attorneys’ fees.

On actual damages, the Debtor argued that it was insulated from liability as successor to Idearc, Inc., which received a bankruptcy discharge in 2009.  The Court disagreed, finding that YPPI was an executory contract claimant whose contract Idearc assumed.  Since YPPI was not required to file a proof of claim in the Idearc bankruptcy, its claim was not discharged.  The Court next considered whether YPPI had standing to enforce the licensing agreement, which was negotiated by Yellow Pages Photos, Inc. (“old YPPI”) before it changed its name to AdMedia Systems, Inc. and transferred its business and copyrights to a new Florida corporation named Yellow Pages Photos, Inc. (“new YPPI”).  The Court determined that there is a material factual dispute regarding the Debtor’s knowledge that it was dealing with new YPPI under the licensing agreement and denied summary judgment on this issue.  The Court also denied summary judgment on the Debtor’s statute of limitations defense, since there was a material dispute of fact over when YPPI learned of the breaches of the agreement.

A copy of the Court’s memorandum opinion is available here.

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