Cawthon v. Zhousunyijie

Background

Scott Cawthon alleged that he owned copyrights covering characters from the Five Nights at Freddy’s series and that Zhousunyijie sold an unauthorized set of six toy figures through Amazon. The product was labeled as a set of Five Nights at Freddy’s figures and included figures that allegedly copied Foxy the Pirate, Chica the Chicken, Freddy Fazbear, Bonnie the Rabbit, and Marionette.

Cawthon first complained to Amazon under the Digital Millennium Copyright Act, and Amazon removed the listing. Zhousunyijie then submitted a counter-notice asking Amazon to restore the material. Cawthon filed this lawsuit after Amazon informed him that a complaint was required to prevent the listing from being restored. After earlier disputes about service, the court authorized service by email. The Clerk entered default, and Zhousunyijie did not respond to the motion for default judgment.

Jurisdiction and Service

The court held that it had subject-matter jurisdiction because the claim arose under the Copyright Act. It also held that Zhousunyijie consented to personal jurisdiction by signing a counter-notice consenting to jurisdiction in any federal district where Amazon could be found. The court concluded that email service was proper under Federal Rule of Civil Procedure 4(f), because Cawthon had exercised reasonable diligence but could not locate a known physical address for service, and the email address associated with the Amazon account was likely to provide notice.

Copyright Liability

For copyright infringement, Cawthon had to show ownership of valid copyrights and unauthorized copying. The court found that the copyright registrations and allegations established Cawthon’s ownership of the six characters at issue. It also found that the defendant had access to the copyrighted works because the Five Nights at Freddy’s series and licensing portfolio had been widely distributed and commercially successful.

The court determined that the toy set was substantially similar to Cawthon’s copyrighted works. Five of the six figures were described as virtually identical to corresponding copyrighted characters. Although the sixth figure differed from Marionette in several details, the court found that it still resembled Marionette and that the six figures, considered as a set, had the same overall concept and feel. The court therefore held that the well-pleaded allegations established copyright infringement.

Statutory Damages

Cawthon elected statutory damages and requested $150,000 for willful infringement. The court found that the copyrights had been registered before the alleged infringement, making statutory damages available. It found the infringement willful based on the product’s explicit references to Five Nights at Freddy’s and Foxy, the close similarity of the figures, and Zhousunyijie’s counter-notice after receiving notice of the alleged infringement.

The court noted that Cawthon offered no evidence of the product’s cost, the number of sets sold, Zhousunyijie’s profits, or Cawthon’s lost revenue. Those considerations were therefore neutral or weighed against the largest requested award. At the same time, the court found that the willfulness, the need for deterrence, and the value and commercial success of the copyrighted franchise supported a substantial award. The court awarded $90,000 in statutory damages.

Attorneys’ Fees and Costs

The court found an award of attorneys’ fees and costs appropriate because Zhousunyijie defaulted and the infringement was willful. It reduced the requested attorneys’ fees by 50% after finding that nearly 60 billed hours were excessive, including time spent on administrative matters, extensive legal analysis without sufficient detail, and service-of-process issues that could have been handled more efficiently. The court awarded $13,317.50 in attorneys’ fees and $416.32 in costs for the filing fee and postage.

Equitable Relief and Interest

The court held that a permanent injunction was warranted because Cawthon showed irreparable injury, an inadequate remedy at law, a balance of hardships favoring him, and a public interest in protecting copyright owners’ rights. However, it found Cawthon’s proposed injunction too broad because it covered all products infringing any of his intellectual-property rights rather than being limited to the infringement at issue.

The court ordered a narrower injunction requiring Zhousunyijie and covered persons with actual notice to disclose where the infringing product was sold and how it was manufactured, provide inventory and sales accountings, remove the infringing product from sales locations, stop infringing Cawthon’s copyrights through sales of that product, and file a sworn compliance report within 30 days after entry of the injunction. The court also ordered destruction of the infringing inventory and post-judgment interest under 28 U.S.C. § 1961(a). It declined to award prejudgment interest because Cawthon provided no supporting argument, rate, or calculation.

Disposition

Judge Lewis J. Liman granted the motion for default judgment. He directed Cawthon to file a proposed default judgment and injunction consistent with the opinion by March 25, 2024, and directed the Clerk to close the motion.