Nintendo of America v. Dragon Pacific International

Citation
Nintendo of America, Inc. v. Dragon Pacific Int'l, 40 F.3d 1007 (9th Cir. 1994) (full-text).

Factual Background
George Sheng, the sole proprietor of Dragon Pacific International, imports electronic products from China. Nintendo of America, Inc.'s (“Nintendo”) principal business is the marketing of hardware and software cartridges for its home video game system. In 1990, Sheng began importing and selling video cartridges that were compatible with Nintendo's system.

The cartridges sold by Nintendo usually contain one game. The cartridges sold by Sheng contained numerous games per cartridge, and came in three varieties: thirty-one games in one cartridge (which contained ten Nintendo copyrighted games), forty-two games in one cartridge (which contained eleven Nintendo copyrighted games), and fifty-two games in one cartridge (which contained twelve Nintendo copyrighted games). Sheng infringed a total of thirteen separate Nintendo copyrights.

Trial Court Proceedings
The trial court found that Sheng acted “intentionally, willfully, and with actual knowledge that the multiple-game cartridges infringed Nintendo's copyrights.” Sheng also represented that the cartridges were Nintendo products and marketed them as such, in violation of Nintendo's trademark rights.

On October 22, 1990, Nintendo filed suit to enjoin Sheng from importing the cartridges and to recover damages for copyright and trademark infringement. On November 15, 1990, the trial court entered a preliminary injunction enjoining Sheng from selling, marketing or distributing cartridges using Nintendo's trademark or copyrights. On November 8, 1991, the trial court granted Nintendo’s motion for summary judgment on the issue of liability.

A bench trial on the issue of damages finally took place on December 29 and 30, 1992. At its conclusion, the trial court awarded Nintendo statutory damages under the Copyright Act of $65,000, representing $5,000 for each of the thirteen copyright infringements. The court also awarded $62,000 in actual damages under the Lanham Act. This sum represented the profits made by Sheng on the sale of the cartridges-3100 cartridges at a profit of $20 per cartridge, for a total of $62,000. Because Sheng's violations were found willful, this amount was trebled to $186,000.

Appellate Court Proceedings
On appeal, Sheng claimed that the award of both statutory copyright infringement damages and trademark infringement damages constitutes a “double recovery.”

The appellate court held that Nintendo could recover both statutory damages under the Copyright Act and award of profits, trebled for willfulness, under the Lanham Act because Sheng committed two separate violations. The court also held that the trial court was not required to apportion damages based on infringing and noninfringing elements of cartridges sold because it was difficult to see a workable distinction between Sheng’s representations and, more importantly, Sheng did not meet his burden of presenting any evidence at trial on how to apportion damages.