07-5230-cv
Close-Up Int’l, Inc. v. Berov


                                     UNITED STATES COURT OF APPEALS
                                         FOR THE SECOND CIRCUIT

                                            SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING
A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY
COUNSEL.

       At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan Courthouse, 500 Pearl Street, in the City of New York, on the 29th
day of June, two thousand ten.

Present:
            PETER W. HALL,
            DEBRA ANN LIVINGSTON,
                              Circuit Judges,
                              *
            JOSEPH F. BIANCO,
                              District Judge.
________________________________________________

CLOSE-UP INTERNATIONAL, INC.,
KINOVIDEOOBYEDINENIE KRUPNY PLAN, and
FEDERAL STATE UNITARY KINOKONTSERN
MOSFILM,

                    Plaintiffs-Appellees,

                                v.                          No. 07-5230-cv

JOSEPH BEROV, RIGMA AMERICA CORPORATION,

                    Defendants-Appellants,

NATASHA ORLOVA, SAINT PETERSBURG, RUSSIAN


          *
       Judge Joseph F. Bianco of the United States District Court for the Eastern District of
New York, sitting by designation.
ENTERTAINMENT AND WHOLESALE, INC., and
RUSSIAN DISTRIBUTORS, INC.,

            Defendants.
________________________________________________

For Plaintiffs-Appellees:      HARVEY SHAPIRO , Sargoy, Stein, Rosen & Shapiro, New York,
                               N.Y.

For Defendants-Appellants: ADAM RICHARDS, Adam Richards LLC, New York, N.Y.
________________________________________________

        Appeal from the United States District Court for the Eastern District of New York

(Trager, J.).

        ON CONSIDERATION WHEREOF, it is hereby ORDERED, ADJUDGED, and

DECREED that the judgment of the District Court be and hereby is AFFIRMED.

        Defendants-appellants Joseph Berov (“Berov”) and Rigma America Corporation

(“Rigma”) appeal from a judgment of the district court (Trager, J.), entered pursuant to a partial

grant of summary judgment in favor of the plaintiffs with respect to liability and a jury trial with

respect to damages, holding Berov and Rigma jointly and severally liable for copyright and

trademark infringement and awarding $2,504,000.00 in damages and $323,004.88 in attorneys’

fees and costs. The jury’s damages award comprised $1,350,000.00 in statutory damages with

respect to nine registered works that the defendants were found to have willfully infringed and

$1,404,000 in actual damages with respect to 374 non-registered works; the district court later

reduced the overall award by $250,000.00 to reflect the amount paid by the non-appellant

defendants, who settled. We assume the parties’ familiarity with the underlying facts and

procedural history of the case.




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       On appeal, the appellants raise three arguments. First, they contend that summary

judgment was granted in error because there is a triable issue with respect to whether a document

known as the “Certificate of Authority” was a new contract extending their license and because

the district court made improper credibility determinations. Second, the appellants argue that the

district court usurped the jury’s role by finding willfulness at the summary judgment stage.

Third, they contend that certain documents introduced as evidence at the damages trial were not

properly authenticated. We consider each of these arguments in turn.

       I.      Whether summary judgment was properly granted

       We review the district court’s grant of summary judgment de novo, applying the same

standards that govern the district court’s consideration of the motion. See Aulicino v. New York

City Dep’t of Homeless Servs., 

, 79 (2d Cir. 2009). A motion for summary judgment

may properly be granted – and the grant of summary judgment may properly be affirmed – only

where there is no genuine issue of material fact to be tried, and the facts as to which there is no

such issue to warrant the entry of judgment for the moving party as a matter of law. See Fed. R.

Civ. P. 56(c)(2); see, e.g., Jasco Tools, Inc. v. Dana Corp., 

, 151 (2d Cir. 2009).

The appellants, in challenging summary judgment, must “set forth specific facts showing that

there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 

, 250 (1986).

       Appellants argue that the Certificate of Authority was a new contract extending their

copyright license, saying “shortly after entering into the 1997 Contract, the parties entered into

another agreement which was negotiated at arms length and which, on its face, changed three key

components of the 1997 Contract. . . . it expanded the term of Rigma’s license for an additional




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two years.” They contend that, under the U.S. Copyright Act, the Certificate of Authority created

a transfer of copyright.

       An alleged transfer of copyright is subject to requirements for a valid transfer under

copyright law but is also governed by state contract law. See, e.g., Video Trip Corp. v. Lightning

Video, Inc., 

, 52 (2d Cir. 1989); see also Bassett v. Mashantucket Pequot Tribe, 

, 347 (2d Cir. 2000) (noting that state contract law generally governs in situations

“where the defendant held a license to exploit the plaintiff’s copyright, but is alleged to have

forfeited the license by breaching the terms of the licensing contract and thus to infringe in any

further exploitation”); Sun Microsystems, Inc. v. Microsoft Corp., 

, 1122-23 (9th

Cir. 1999) (citing Video Trip for the proposition that preliminary contractual issues pertaining to

copyright licensing are decided according to state contract law); Nimmer on Copyright

§ 10.08[A] (“[P]rinciples of contract law generally apply to construction of copyright

assignments, licenses, and other transfers of rights[,] [and,] [t]hus, if an assignment does not

contain certain essential terms, it may be held void for indefiniteness.”). Appellants rely upon

New York cases to argue that “whether the certificate of authority altered the terms of the 1997

contract was a material question of fact for the jury.” 1 We have previously explained that

“[u]nder New York law, whether a binding agreement exists is a legal issue, not a factual one,”



       1
          The cases cited by the appellant include: Lazard Freres & Co. v. Protective Life Ins.
Co., 

, 1540 (2d Cir. 1997) (“[I]t remains clear that New York law should
control.”); Krishna v. Colgate Palmolive Co., 

, 16 (2d Cir. 1993) (“We add, finally,
that if we reached the issue posed by New York law . . . we would nonetheless reverse and
remand. Summary judgment is notoriously inappropriate for determination of claims in which
issues of intent, good faith and other subjective feelings play dominant roles.”) (citations and
internal quotation marks omitted); Leberman v. John Blair & Co., 

, 1560 (2d Cir.
1989) (referring to “instant contract” being “governed by New York law”).

                                                  4
Vacold LLC v. Cerami, 

, 123 (2d Cir. 2008), and also that “an enforceable contract

requires mutual assent to the essential terms and conditions thereof.” Opals on Ice Lingerie v.

Bodylines Inc., 

, 372 (2d Cir. 2003).2

        At oral argument, appellants contended that “on its face, the certificate is unambiguous.”

On its face, however, the certificate of authority is simply a statement, which can be shown to

third parties to demonstrate that Rigma is a licensee, and which provides a telephone number

third parties can call to confirm Rigma’s authority. The Certificate does not address the

consideration provided by Rigma, the licensing rate, or the obligations of the parties. It does not

show mutual assent to the essential terms of a license. In addition to these omissions, the

Certificate also contains an affirmative reason for summarily rejecting the notion that it is a

contract – the Certificate begins by stating that it is issued “pursuant to the contract in force

between the parties.” It is implausible that a contract replacing an earlier contract would open by

deriving all of its authority from that earlier contract.

        Appellants claim that the district court made improper determinations of witness

credibility as the basis for its decision on summary judgment. The court did appear to make a

credibility determination with respect to Joseph Berov. At the hearing on summary judgment,

the judge stated, referring to Berov, “You are talking about a criminal, someone convicted of a


        2
          Appellees, citing Itar-Tass Russian News Agency v. Russian Kurier, Inc., 

(2d. Cir. 1998), argue on appeal that, under the Berne Convention, Russian copyright law
governs questions of ownership for copyrights in works created by Russian entities and first
published in Russia. In Itar-Tass, however, we made clear that we were not addressing
assignment of rights, stating: “In deciding that the law of the country of origin determines the
ownership of copyright, we consider only initial ownership, and have no occasion to consider
choice of law issues concerning assignments of rights.” 

n.11. Because appellants’
arguments against summary judgment fail even under the New York law upon which they rely,
we need not reach appellees’ arguments based on Russian law.

                                                   5
crime. You would expect me to credit his testimony about anything.” On summary judgment,

courts are not to make judgments of credibility. See Lipton v. The Nature Co., 

, 471

(2d Cir. 1995).

       The mere fact that the district court made a credibility determination, however, does not

necessarily compel reversal. Here, Berov’s affidavit in opposition to summary judgment fails to

provide evidence of mutual assent to all of the essential terms (e.g., the licensing rate) necessary

to make the Certificate of Authority a valid contract extending the license. Thus, even crediting

Berov’s affidavit, the appellants still failed to provide sufficient evidence to allow a finding that

the Certificate of Authority was a valid new licensing contract, and the credibility determination

by the court, even if in error, does not compel reversal. Even if the district court improperly

assigned weight to its observation that Berov was not credible, our own review is de novo, and

we are independently satisfied that the parol evidence rule would have barred extrinsic evidence

regarding the formation of the Certificate in any event, because extrinsic evidence is not

admissible “to vary or contradict the terms of a fully integrated writing.” Topps Co., Inc. v.

Cadbury Stani S.A.I.C., 

, 69 (2d Cir. 2008). Because we find both the 1997 Contract

and the Certificate of Authority unambiguous – and the latter is unambiguously a badge of

authority, not a contract — Berov was not prejudiced by whatever determination the district court

made with respect to his credibility.

       II.        Whether the district court improperly determined willfulness

       Generally speaking, summary judgment is not a tool well suited to determining

willfulness, especially when it turns on “[d]eterminations of credibility,” which “are within the

province of the jury.” 

. It is not clear from the summary judgment order


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whether the district court was actually attempting to determine willfulness at the summary

judgment stage; the district court’s order recited the issues on which the plaintiffs had sought

summary judgment, including willfulness, and then ordered that “plaintiffs’ motion for partial

summary judgment on its [sic] claims of defendants’ liability for copyright and trademark

infringement is hereby granted.” What cannot be contested, however, is that the jury actually

determined willfulness. The jury was charged that it had to decide whether or not the

infringement was willful, and the jury did find willful infringement. At no point did the district

court direct the jury to find willfulness or make any comments prejudicial to the jury’s neutral

assessment of willfulness. However peculiar the district court’s reference to willfulness in its

summary judgment order may have been, it had no actual effect on the outcome of the trial or on

the final judgment entered.

       For the first time in their reply brief, and at oral argument, appellants recast their

argument to contend that the limitation of evidence regarding the Certificate of Authority during

the damages phase of the case was prejudicial error. The reference to limitation of evidence in

appellants’ opening brief, however, was raised only as support for their argument that the district

judge had improperly usurped the jury’s obligation to determine willfulness based on his

determination of Berov’s credibility. Appellants did not argue that evidentiary error was a

separate basis for reversal. Thus, this issue is not properly before us. See, e.g., McCarthy v.

S.E.C., 

, 186 (2d Cir. 2005) (“[A]rguments not raised in an appellant's opening

brief, but only in his reply brief, are not properly before an appellate court even when the same

arguments were raised in the trial court.”).




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        III.    Whether the documents provided by the FBI were properly admitted

        There is no merit to appellants’ contention that documents provided by the FBI should

have been excluded, either because they were not authenticated as business records or because

the chain of custody was insufficiently proven. A former employee of Berov authenticated the

contested documents based upon his experience working with Berov, testifying regarding the

format of reports used and Mr. Berov’s signature. The former employee also testified regarding

the chain of custody of the documents, as did plaintiff’s prior counsel. This testimony provided a

sound basis for the trial court to determine that the records had sufficient indicia of

trustworthiness as business records. See Saks Int’l, Inc. v. M/V Export Champion, 

, 1013 (2d Cir. 1987). Furthermore, although appellants insist that it was critical that an FBI

agent testify to chain of custody, it is only necessary that “[t]he chain of custody . . . be

established with sufficient completeness to make it improbable that the original item either was

exchanged with another or has been contaminated or tampered with,” and “[s]light deficiencies

in the chain of custody go to the weight of the evidence, not its admissibility.” Weinstein’s

Federal Evidence § 901.03[3].

        We have considered all of the appellants’ other arguments and find them to be without

merit. Accordingly, we AFFIRM the judgment of the district court.

                                                FOR THE COURT:
                                                CATHERINE O’HAGAN WOLFE, CLERK




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