OPINION

PRATTER, District Judge.

In Joe Hand Promotions, Inc.'s ("Joe Hand") Renewed Motion for Default Judgment (Docket No. 14), Joe Hand seeks statutory and enhanced damages for Cafe Nostalgie and Victor Yakubets's unlawful interception of cable programming under 47 U.S.C. § 553(a)(1);1 vicarious liability against Mr. Yakubets; and leave to move for attorneys' fees and costs. Because Joe Hand is entitled to damages, the Court grants the Motion as set out below. But to determine the appropriate amount, and who is liable therefor, the Court must consider several issues not yet addressed by the Third Circuit Court of Appeals and to which district courts have adopted a variety of approaches.

An unopposed motion for default judgment can be a tempting invitation to defer automatically to, or at least consider more charitably, the plaintiff's view of the law in addition to his allegations of fact. The invitation is all the more tempting because of the work-intensive paradox that results from declining it: While in our adversarial system, a court's acting sua sponte is the exception to the rule, a court evaluating a motion for default judgment must itself ask whether the plaintiff's complaint states claim(s) upon which relief can be granted. Where the complaint fails to state a claim, therefore, the paradox is that the defendant may have better luck by defaulting before an attentive (but unassisted) court than by engaging (and paying) a lawyer who, for one reason or another, fails to have the same causes dismissed early on with a Rule 12(b)(6) motion.

If, by contrast, the district court accepts the plaintiff's invitation and grants its imprimatur to the plaintiff's unchallenged legal theory, the court risks making bad law, even though that law is only persuasive authority, and even though the court is "confined from molar to molecular motions." S. Pac. Co. v. Jensen, 244 U.S. 205, 221, 37 S.Ct. 524, 61 L.Ed. 1086 (1917) (Holmes, J., dissenting). This risk is especially dangerous where a region of the legal landscape is typified by defaults, for default judgments not only often result from one-sided proceedings, but also rarely weather the appellate scrutiny necessary to ensure the law's uniformity. The unintended consequence of different rules or applications to similar cases is not only the erosion of the principle that the rule of law comprises the justice of similar treatment for similar circumstances, but also the loss of one of the principal aims of the law: predictability or certainty, such that persons and entities, good or bad, may understand the law's limits and adjust their behavior accordingly. See Oliver Wendell Holmes, Jr., The Path of the Law, 10 Harv. L.Rev. 457, 459-60 (1897). As Justice Holmes explained, "Far the most important and pretty nearly the whole meaning of every new effort of legal thought is to make these prophecies more precise, and to generalize them into a thoroughly connected system.... The prophecies of what the courts will do in fact, and nothing more pretentious, are what [is] mean[t] by the law." Id. at 457-58, 461-62. Where the appellate courts have little opportunity to map the contours of certain statutory terrain, as with 47 U.S.C. § 553 here, litigants must contend with district courts' differing measurements of the same topography. For good or ill, this Court sees its duties as including sowing seeds in the legal landscape so that its harvests will be better anticipated, if not better understood.

A survey of district court decisions on § 553 (and its satellite analog, 47 U.S.C. § 605) shows a variety of approaches to, and therefore outcomes under, the following questions presented in this case: First, how should "statutory damages" be measured under 47 U.S.C. § 553(c)(3)(A)(ii), which, when taken alone, reveals few of which factors should be considered? Second, what must a plaintiff prove—or allege, at the default judgment stage-to show that the defendant committed the § 553 violation "willfully and for purposes of commercial advantage or private financial gain," § 553(c)(3)(B), and thus trigger the court's exercise of discretion to award the plaintiff so-called "enhanced damages"? And what factors should guide this decision? Finally, under what circumstances, if any, may an individual or entity be held vicariously liable for a violation of § 553, and how much is required to plead sufficiently such vicarious liability? And if a defendant is vicariously liable, is he jointly and severally liable?

For these reasons, in order to grant Joe Hand's Motion, the Court both surveys the legal terrain and discusses several approaches to the issues posed in an attempt to provide reasoned guideposts rather than Delphic pronouncements.

I. FACTUAL AND PROCEDURAL HISTORY

Joe Hand, an international closed-circuit distributor of sports and entertainment programming, purchased the exclusive nationwide commercial distribution rights to broadcast the boxing match "The Big Challenge": Adamek v. Grant ("the Match") on August 21, 2010. Joe Hand then spent substantial sums marketing the Match to commercial establishments, some of which purchased sublicenses from Joe Hand to exhibit the Match to their customers.

Café Nostalgie is a restaurant in Philadelphia, Pennsylvania. On the night of August 21, 2010, without such a sublicense, Café Nostalgie intercepted and broadcast the Match to its patrons on four televisions, as observed by Joe Hand's investigator, Daniel Szlezak. See Hand Aff. ¶ 7 (Docket No. 8); Szlezak Aff. (Docket No. 7-3). Because Café Nostalgie's reception of the Match was unlicensed, the interception violated either 47 U.S.C. § 553(a)(1) ("Unauthorized interception or receipt" of "any communications service offered over a cable system") or 47 U.S.C. § 605(a) ("No person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person...."). See also generally Joe Hand Promotions, Inc. v. Yakubets, No. 12-4583, 2013 WL 5224123 (E.D.Pa. Sept. 17, 2013).

Joe Hand subsequently brought suit against Cafe Nostalgie and Victor Yakubets, who is identified on Café Nostalgie's Liquor Control Board License as President, Secretary/Treasurer, Director, Stockholder, and Manager/Steward, and who Joe Hand thus alleges had the right and ability to supervise the activities of Cafe Nostalgie and its employees. Although both Mr. Yakubets and Cafe Nostalgie appear to have been properly served, see Yakubets, 2013 WL 5224123, at *1, they failed to appear or answer Joe Hand's Complaint, and the Clerk of Court entered their default, see Fed.R.Civ.P. 55(a). Joe Hand then moved for default judgment under 47 U.S.C. § 605 and the tort of conversion (Docket No. 7), see Fed. R.Civ.P. 55(b)(2).

The Court concluded that because Joe Hand did not allege or subsequently show how Cafe Nostalgie intercepted the Match (i.e., by satellite or cable), Joe Hand could proceed only under 47 U.S.C. § 553, which governs cable transmissions:

Yakubets, 2013 WL 5224123, at *4-5 (some citations and footnotes omitted and/or reformatted).2

For these reasons, the Court denied Joe Hand's Motion for Default Judgment with prejudice as to § 605 and invited Joe Hand to move again under § 553 (Docket Nos. 11-13).3 Joe Hand's Renewed Motion for Default Judgment is now before the Court. Joe Hand did "not request a hearing on damages," Br. 8-9 n. 4 (Docket No. 14-1), but rather relies on its submissions on the Docket, including the affidavits of Joe Hand, Jr., Joe Hand's President (Docket No. 8), and Daniel Szlezak, who investigated the unlawful interception of the Match (Docket No. 7-3), and Café Nostalgie's liquor license, of which Joe Hand has submitted a copy (Docket No. 7-3) and of which the Court may also take judicial notice.4

II. THE DEFAULT JUDGMENT STANDARD OF REVIEW

Federal Rule of Civil Procedure 55 charts the course a plaintiff must navigate to obtain a default judgment against a nonresponsive defendant. First, if the plaintiff shows the defendant's "fail[ure] to plead or otherwise defend, ... the clerk must enter [the defendant's] default," Fed. R.Civ.P. 55(a), which is valid only if the defendant was properly served. See Petrucelli v. Bohringer & Ratzinger, 46 F.3d 1298, 1304 (3d Cir.1995).

The plaintiff may then "apply to the court for a default judgment." Fed. R.Civ.P. 55(b)(2).5 The court's initial inquiry is "whether the unchallenged facts constitute a legitimate cause of action." 10A Charles Alan Wright, Arthur R. Miller, et al., Federal Practice and Procedure § 2688 (3d ed.2013) (citing cases).6 As at the motion to dismiss stage, the court accepts as true the well-pleaded factual allegations in the plaintiff's complaint, except those relating to damages, as though they were admitted or established by proof, Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir.1990), as well as all reasonable inferences that can be drawn from the complaint, e.g., Yang v. Hardin, 37 F.3d 282, 286 (7th Cir.1994). Conclusory allegations and the parties' legal theories or "conclusions of law" are not entitled to the same presumption and are not deemed admitted. Wright & Miller, supra, § 2688.7

If the court determines that the plaintiff has stated a cause of action, it must then assess damages. Unlike liability, unless damages are "liquidated or computable," they "cannot be awarded simply on the basis of the pleadings, but must instead be established at an evidentiary hearing held pursuant to [Rule] 55(b)(2)," Comdyne I, 908 F.2d at 1152, or otherwise by such proof as the plaintiff may submit without a hearing.8

Default judgments are disfavored, see Farnese v. Bagnasco, 687 F.2d 761, 764 (3d Cir.1982); the default judgment context usually offers none of the adversarial argument upon which the American legal system is founded and which remains a pillar of courts' ability to make informed and well-reasoned decisions. Thus, under Chamberlain v. Giampapa, 210 F.3d 154 (3d Cir.2000), the district court must examine three additional factors to determine whether it should grant a default judgment: "(1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant's delay is due to culpable conduct." Chamberlain, 210 F.3d at 164.

"Considerable delays," especially those that might "stretch on indefinitely," are sufficient to show prejudice to the plaintiff. Grove v. Rizzi 1857 S.P.A., No. 04-2053, 2013 WL 943283, at *2 (E.D.Pa. Mar. 12, 2013) (citation omitted).9 Second, outside of the court's obligation to decide whether it has jurisdiction and whether the complaint states a claim, the court may presume that an absent defendant who has failed to answer has no meritorious defense, e.g., Doe v. Simone, No. 12-5825, 2013 WL 3772532, at *5 (D.N.J. July 17, 2013), because "[i]t is not the court's responsibility to research the law and construct the parties' arguments for them," Econ. Folding Box Corp. v. Anchor Frozen Foods Corp., 515 F.3d 718, 721 (7th Cir. 2008). Third, the defendant's failure or refusal to "engage[] in the litigation process and [to] offer[] no reason for this failure or refusal" may "qualif[y] as culpable conduct with respect to the entry of a default judgment—indeed, for the Court to conclude otherwise would be to reward the recalcitrant or the oppositional and uncooperative." E. Elec. Corp. of N.J. v. Shoemaker Constr. Co., 657 F.Supp.2d 545, 554 (E.D.Pa.2009).

The district court's evaluation of these factors is reviewed for abuse of discretion10 and tends to be perfunctory because "when a defendant has failed to appear or respond in any fashion to the complaint, th[e] analysis is necessarily one sided." T & C Leasing Inc. v. BBMC, LLC, No. 09-873, 2010 WL 231128, at *1 (M.D.Pa. Jan. 14, 2010) (citing Anchorage Assocs. v. V.I. Bd. of Tax Review, 922 F.2d 168, 177 n. 9 (3d Cir.1990)). Thus, "entry of default judgment is typically appropriate in such circumstances at least until the defendant comes forward with a motion to set aside the default judgment pursuant to Rule 55(c)." Id.; cf. Feliciano v. Reliant Tooling Co., Ltd., 691 F.2d 653, 657 (3d Cir. 1982) ("[P]rejudice suffered by a non-defaulting party can often be rectified through the trial court's power under Rule 60(b) to impose terms and conditions upon the opening of a judgment."); Gross v. Stereo Component Sys., Inc., 700 F.2d 120, 124 (3d Cir.1983) (explaining that a defendant who appears after the entry of default judgment may show that his conduct was not "taken willfully or in bad faith").11

III. DISCUSSION

Section 553(a) of Title 47, U.S.Code, provides that "[n]o person shall intercept or receive or assist in intercepting or receiving any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law." 47 U.S.C. § 553(a)(1). The statute provides a civil cause of action that may be brought by "[a]ny person aggrieved by any violation" of the prohibition of interception or reception, id. at § 553(c)(1), as well as criminal penalties, id. § 553(b). See also TKR Cable Co., 267 F.3d at 207. Because the Match in this case was broadcast over cable and satellite, and Cafe Nostalgie intercepted it, Cafe Nostalgie must have done so either by cable or satellite. In the absence of any evidence to indicate which method was used, the Court applied the presumption that the interception was by cable. Yakubets, 2013 WL 5224123, at *4-5.

The Court concludes that Joe Hand is entitled to both statutory and enhanced damages under § 553(c)(3)(A)(ii) and § 553(c)(3)(B), respectively, for Café Nostalgie's violation of § 553(a)(1). Under the test the Court adopts from copyright law, as have a number of other courts, Joe Hand is also entitled to a judgment of vicarious liability against Mr. Yakubets, but to a limited extent. Finally, Joe Hand may move for attorneys' fees and costs under § 553(c)(2)(C). In arriving at these conclusions, the Court relies on the well-pleaded factual allegations in Joe Hand's Complaint, and the reasonable inferences that may be drawn from them, as well as the documentary evidence Joe Hand has submitted on the Docket. None of the three Chamberlain factors counsel against entering default judgment.12

A. Statutory and Enhanced Damages under 47 U.S.C. § 553

A plaintiff may recover two types of damages under § 553. First, "plaintiffs [may] choose between actual damages or statutory damages" under § 553(c)(3)(A), Gen. Instrument Corp. of Del. v. Nu-Tek Elecs. & Mfg., Inc., 197 F.3d 83, 95 (3d Cir.1999), which provides:

47 U.S.C. § 553(c)(3)(A). Because "[t]here are no mens rea or scienter elements" under § 553(a), defendants are strictly liable for actual or statutory damages. E.g., J & J Sports Prods., Inc. v. De La Cerda, No. 11-1896, 2013 WL 5670877, at *5 (E.D.Cal. Oct. 16, 2013) (citation omitted).13

Second, § 553 also provides for what courts have termed "enhanced damages":

47 U.S.C. § 553(c)(3)(B). Thus, a particular mental state is required for enhanced damages.

Joe Hand requests statutory and enhanced damages in an amount "that both sufficiently compensates [it] and functions as an effective deterrent." Br. 9. But while the terms of the statutory and enhanced damages subsections afford courts discretion in assessing damages (by awarding an amount of statutory damages it "considers just," of up to $10,000, 47 U.S.C. § 553(c)(3)(A)(ii), or of enhanced damages, "in its discretion," of up to $50,000, id. § 553(c)(3)(B)), neither subsection spells out what factors should be considered. Nor, as Joe Hand notes, has the Third Circuit Court of Appeals provided "a formula for calculating damages" under § 553.14 The first task, then, is to outline the parameters of the court's discretion.

1. Statutory Damages under § 553(c)(3)(A)(ii)

a. The measurement of statutory damages

Joe Hand argues that because § 553 is aimed at reducing signal piracy, deterrence is an appropriate consideration for determining statutory damages under § 553(c)(3)(A)(ii). Br. 10. Such methodology has tended to produce damages at the higher end of the case law's spectrum. For instance, Joe Hand cites to a case proposing that a statutory damages award should be "enough to deter defendants and others like them from engaging in such conduct again," and thus can be "well in excess of the probable licensing fee,"15 and another case finding "deterrence needed" and employing a per-patron approach as "an appropriate penalty."16

The Court disagrees with this approach. While deterrence is a universal issue addressed by § 553—the cause of action itself is a general deterrent, and there is no doubt "that Congress drafted the provision to deter the newly emergent and previously unaddressed cable piracy," TKR Cable Co., 267 F.3d at 204—deterrence as a factor is better considered under the enhanced damages rubric, which requires a showing of willfulness, see 47 U.S.C. § 553(c)(3)(B), than the statutory damages provision, which imposes strict liability. The Court thus agrees with the First Circuit Court of Appeals, the only appellate court to have addressed the aim and evaluation of § 553's statutory damages, that statutory damages should be "based solely on the estimated value of the services stolen, without consideration of other harms ... or of other policies favoring deterrence." Charter Commc'ns Entm't I, DST v. Burdulis, 460 F.3d 168, 181 (1st Cir.2006). Because "statutory damages are merely an alternative to actual damages," they "should be `as reasonable an estimate of actual damages as the facts ... allow,' not greater." Id. (alteration in original) (quoting Comcast of Mass. I, Inc. v. Naranjo, 303 F.Supp.2d 43, 48 (D.Mass.2004)). Several reasons support evaluating statutory damages as an estimate of actual damages and not increasing them as a penalty or deterrent.

First, nothing in the actual or statutory damages subsections, § 553(c)(3)(A)(i) and (ii), suggests that deterrence is an appropriate decisional factor. Instead,

Burdulis, 460 F.3d at 181 (citing Naranjo, 303 F.Supp.2d at 49).

Second, § 553's overall structure favors weighing deterrence under the enhanced damages provision and not under the statutory damages provision. As the First Circuit Court of Appeals explained in Charter Communications Entertainment I, DST v. Burdulis, 460 F.3d 168,

Burdulis, 460 F.3d at 183. The threat of criminal liability under § 553(b) for willful violations also acts as both a general deterrent and a specific deterrent, as certain types of repeat offenders face increasingly stiff penalties. See 47 U.S.C. § 553(b)(2). Section 553's language and structure suggest no reason to assume that Congress expected courts to double count deterrence by factoring it first into an actual or statutory damages award and then again into an enhanced damages award. See also, e.g., J & J Sports Prods., Inc. v. Martinez, No. 11-754, 2013 WL 2147790, at *8 (M.D.N.C. May 16, 2013) ("Plaintiff claims no other actual damages, aside from costs and attorneys' fees, but rather points to speculative harm to Defendant La Hacienda Inc.'s competitors and the need for deterrence of future violations, arguments better suited to the determination of enhanced damages." (citation omitted)). The cases Joe Hand cites offer no convincing reasoning to the contrary.17

Joe Hand's invocation of deterrence depends in part on its view that "Congress has equated a violation of the statutes to theft of service." Br. 9. This perspective is misleading. While Congress enacted § 553 to combat cable piracy, see infra subsection III.A.2.c, the statute creates different penalties based on different mental states. Willful violations of § 553(a)(1)'s prohibition can subject violators to criminal penalties, 47 U.S.C. § 553(b), and additional, so-called "enhanced damages," id. § 553(c)(3)(B). By contrast, actual and statutory damages are awarded without any showing of mens rea, or even if the conduct is merely negligent.18 Further, "[i]n any case where the court finds that the violator was not aware and had no reason to believe that his acts constituted a violation of this section, the court in its discretion may reduce the award of damages to a sum of not less than $100," id. § 553(c)(3)(C)—a sum which may be considerably less than what the court would otherwise have to impose. As a whole, § 553 plainly does not equate violation of § 553(a)(1) with piracy or theft. In fact, the deterrence rationale makes less sense with respect to negligent misconduct than intentional or willful misconduct, but statutory damages do not require intent or willfulness.

Finally, as the court pointed out in Comcast of Massachusetts I, Inc. v. Naranjo, 303 F.Supp.2d 43, the consideration of deterrence in awarding statutory damages, "when carried through to its full implications,... leads to absurd results" because under that theory,

303 F.Supp.2d at 49; accord Burdulis, 460 F.3d at 183.

For these reasons, the Court holds, in accordance with the Naranjo-Burdulis approach, that statutory damages under § 553(c)(3)(A)(ii) "should be calculated based solely on an estimate of actual damages," without considering deterrence. Burdulis, 460 F.3d at 181-83. This interpretation also "best satisfies the command of the statute and the judicial interest in promoting predictability and transparency." Id. at 181-82.

* * *

Only one court appears to have acknowledged and disagreed with the Naranjo-Burdulis approach (other courts have simply not engaged in the legal analysis). In Comcast of Illinois X, LLC. v. Toguchi, No. 05-5363, 2008 WL 360682 (N.D.Ill. Feb. 11, 2008), the court criticized Naranjo's approach as ignoring the difference between the actual damages provision and the statutory damages provision, because, in the Toguchi court's words, "A plain reading of the statute demonstrates Congress's clear intent to provide courts with two different methods in which to calculate and award compensatory damages. It is our duty to enforce § 553 as it was written and not to change its meaning by adopting a different construction." Id. at *4.

The concern is a valid one, but the Naranjo-Burdulis approach still represents the best interpretation of § 553's statutory damages, for the reasons discussed above. The Toguchi court assumes too much from the different language in the actual and statutory damages subsections. The statute's language and structure suggest that statutory damages are an alternative to actual damages because of the difficulty of proving actual damages, not so that the plaintiff can recover more than actual damages. Indeed, the actual damages provision requires the aggrieved party to "prove ... the violator's gross revenue" from the violation, 47 U.S.C. § 553(c)(3)(A)(i) (emphasis added); the statutory damages option, of course, does not, see id. § 553(c)(3)(A)(ii). See also H.R.Rep. No. 98-934, at 85 (1984), reprinted in 1984 U.S.C.CA.N. 4655, 4722 ("In determining the violator's profits, the party aggrieved shall have the burden of establishing the violator's gross revenues by the best means available, while the violator shall have the burden of proving any expenses he incurred which are normally deductible in determining profit, as well as any profit and revenues which are attributable to factors or activities other than the violation."). The statutory damages provision thus makes sense as authorizing courts to use their discretion to fashion factors to "estimate," rather than "comput[e]," § 553(c)(3)(A)(i), actual damages, see, e.g., Coxcom, Inc. v. Chaffee, No. 05-0107, 2007 WL 1577708, at *3 (D.R.I. May 31, 2007), aff'd, 536 F.3d 101 (1st Cir.2008), and can help to explain the cap of $10,000 "for all violations involved in the action," 47 U.S.C. § 553(c)(3)(A)(ii); see Nu-Tek, 197 F.3d at 95, as a trade-off for demanding less proof.19

A broader concern, however, is that the Toguchi court's alternative, similar to the tack that many courts have pursued, leaves courts (and litigants) lost at sea. After criticizing the Naranjo rule, the Toguchi court turned to "a fact specific analysis." Toguchi, 2008 WL 360682, at *4. But while it indeed specified facts, the Toguchi court did not analyze how it reached its conclusion that $4000 would be a just award. See id.

Such "bottom line" approaches are common. Courts in a number of decisions have mixed and matched factors with little explanation of why those factors are relevant (or consistent with the Naranjo-Burdulis approach's rationale),20 and in some cases, courts have chosen statutory damages figures after little more than a cursory survey of what a handful of other courts have done. Still other courts explicitly double-count the deterrence rationale by considering it in both the statutory damages and the enhanced damages inquiries, with no explanation of why doing so is appropriate;21 one court, for example, found "five times the [broadcast cost]" an "appropriate" multiplier for arriving at a "base amount [that] is appropriate for the statutory violation."22 These decisions may be partly the consequence of the nonadversarial nature of the adjudication of default judgment motions and their only rare exposure to appellate scrutiny.23

b. Factors for measuring statutory damages

If the aim of statutory damages is to estimate actual damages, what factors are to be considered? The court should begin by asking what the defendant would have paid had he sought to obtain a lawful license. If the plaintiff issued a card listing rates for its programming (e.g., segmented by the capacity of the establishment), this number can be easily determined and can form the basis for the statutory damages award.24 In cases without a rate card, courts have attempted to approximate a sublicense fee by estimating a per-patron charge and multiplying it by the number of patrons in the defendant commercial establishment.25

Second, the court might consider "any profits of the violator that are attributable to the violation which are not taken into account in computing the actual damages," one of the factors under the actual damages subsection, § 553(c)(3)(A)(i). (The Naranjo and Burdulis courts did not discuss whether profits should be added because they dealt with use of cable descramblers in residential settings. See, e.g., Burdulis, 460 F.3d at 182-83 (passing on the question of "restitution").) Here, a court will necessarily have to exercise some discretion as to whether to award any further damages at all, for evidence of profits may be too speculative if the plaintiff cannot show that the profits "are attributable to the violation." 47 U.S.C. § 553(c)(3)(A)(i); see, e.g., Joe Hand Promotions, Inc. v. White, No. 11-01331, 2011 WL 4406354, at *6 (N.D.Cal. R & R Aug. 2, 2011) ("[T]he Court recommends awarding Plaintiff $1,400.00 in statutory damages under 47 U.S.C. § 553(c)(3)(A)(ii) representing the $1,100.00 in actual losses based on the license fee, plus $300.00 to account for Defendants' additional possible profits from food and beverage sales."), adopted, 2011 WL 4406351 (Sept. 21, 2011); J&J Sports Prods., Inc. v. Duong, No. 13-02002, 2014 WL 68904, at *4 (N.D.Cal. Jan. 8, 2014) ("As there is no evidence of how much Defendant made during the unlawful exhibition of the Program, the Court shall base statutory damages on the cost of the commercial license."). For instance, the court cannot estimate how many patrons came (and how much money they spent) because of the intercepted programming without any evidence of how many patrons come at similar times or what kinds of food and drink prices the establishment charges. Thus, in the absence of evidence, an estimate of profits should be a conservative figure that does not simply allow circumvention of the actual damages provision's proof requirement.

Factors to consider in estimating profits might include, for instance, (1) the size of the establishment; (2) the number of patrons at the establishment, taken, to the extent possible, as the number of patrons present because of the interception (to which evidence of advertising to attract customers may be relevant); (3) the number, size, and position of screens displaying the broadcast (a factor to be considered in conjunction with (1) and (2) as an indication of who might be there specifically to watch); (4) any cover charge levied because of the interception; (5) what additional money patrons spent because of the interception (i.e., the amounts spent by those who otherwise would not have come, plus any other premiums or greater spending by those who would have come anyway); and (6) any such other factors as may appear relevant in the case before the court.26

c. Estimating statutory damages in this case

The rate card in this case makes estimating actual damages straightforward as an initial matter. See Hand Aff., Ex. 1. Mr. Szlezak estimated that "[t]he capacity of [Café Nostalgie] is approximately 100 people," Szlezak Aff. 2, and the rate card and Mr. Hand's Affidavit establish that the "sublicense fee for the [Match] was based on the capacity of the establishment.... [I]f a commercial establishment had a maximum fire code occupancy of 100 persons, the commercial sublicense fee would have been $500.00." Hand Aff. ¶ 8. The Court therefore finds that Joe Hand is entitled to $500 as an estimate of actual damages.

Second, estimating Café Nostalgie's profits on account of its unlawful interception of the Match is difficult given the lack of evidence (due, in large part, to the Defendants' own default). As Joe Hand points out, "The capacity of Cafe Nostalgie was estimated to be 100." Br. 13 (citing Szlezak Aff. 3). There were between 44 and 48 patrons, according to Mr. Szlezak's headcounts over a two-hour period, and "the Program was displayed on four televisions, one 36 "television and three 40" televisions." Id. (citing Szlezak Aff. 1-3). Further, the televisions seemed to project their coverage to most of the square footage of the bar: one television "was to the right as [Mr. Szlezak] entered, above the small bar"; another was to his "immediate left" in "the main area"; a third was "[b]ack in the left corner"; and the fourth was "[i]n the back right ... booth area." Szlezak Aff. 1. There is no evidence of a cover charge or advertising for the show.

What the Court does not have, however, is any evidence of Café Nostalgie's prices or how many people are usually in the bar on a Saturday night. Even though Cafe Nostalgie and Mr. Yakubets defaulted, Joe Hand could have sent Mr. Szlezak or another investigator back on other nights at similar times to see how many patrons usually visit Café Nostalgie. In fact, during the two hours Mr. Szlezak spent at Café Nostalgie, he could have snapped a picture of the menu to establish prices or have talked with "Oksana the waitress," Szlezak Aff. 1, to ask how many people come on different nights and when such shows are broadcast. Such expectations should come as no surprise, given that the default judgment standard itself requires a plaintiff to offer proof of damages.27

Still, given Joe Hand's inability to take discovery, the Court will assume that (a) half of the individuals present came solely because of the show and (b) each spent $20 on food and drink, such that 24 * $20 = $480, and, further, that (c) the remaining half each spent $10 more than they otherwise would have because they stayed longer to watch the Match, or 24 * $10 = $240, for a total of $720. These are generous allowances given the lack of evidence; their foundation on revenue rather than profit; and the fact that without evidence of damages, courts often award only the sublicense fee from the rate card.28 The inability to offer evidence of its expenses is, perhaps, how Café Nostalgie's default may be balanced to hurt it no less than Joe Hand, which consequently cannot take discovery. Nonetheless, these estimates seem reasonable, and Joe Hand offers no reasons to the contrary. August 21, 2010, was a Saturday, so perhaps less can be inferred from the presence of 48 individuals than if the interception had occurred on a Monday night, for example. But all the televisions, which, taken together, were visible in most, if not all, of Café Nostalgie's space, were playing the Match, thereby making it more likely that the patrons there were there to watch it.

For these reasons, the Court finds that as to statutory damages Joe Hand is entitled to the $500 it would have received had Cafe Nostalgie paid for a sublicense, plus an estimate of $720 in profits, for a total of $1220.

2. Enhanced Damages under § 553(c)(3)(B)

Congress "focused on deterrence in enacting § 553(c)(3)(B)," Burdulis, 460 F.3d at 183, which, by its plain terms, triggers the court's discretion to increase actual or statutory damages by up to $50,000 if the violation was committed (a) "willfully" and (b) "for purposes of commercial advantage or private financial gain," 47 U.S.C. § 553(c)(3)(B). See Comcast of S. New Eng., Inc. v. Kacavas, No. 07-10780, 2007 WL 4556685, at *2 (D.Mass. Dec. 18, 2007) ("Once [plaintiffs] have met those conditions, this Court has the discretion to impose increased damages.").

a. Whether "the violation was committed willfully"

Though a familiar term, "willfully" bears "no fixed meaning," United States v. Jenkins, 275 F.3d 283, 287 n. 3 (3d Cir.2001) (quoting Smith v. Wade, 461 U.S. 30, 63 n. 3, 103 S.Ct. 1625, 75 L.Ed.2d 632 (1983) (Rehnquist, J., dissenting)); its definition must be determined according to context, id. at 287 & n. 3. See also McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988) ("The word `willful' is widely used in the law, and, although it has not by any means been given a perfectly consistent interpretation, it is generally understood to refer to conduct that is not merely negligent....").29 Neither the Supreme Court nor the Third Circuit Court of Appeals has interpreted what "willfully" requires under either § 553(c)(3)(B) or its counterpart, 47 U.S.C. § 605(e)(3)(C)(ii), but several factors suggest that § 553(c)(3)(B) requires at least both intent and either knowledge or reckless disregard for whether the conduct violates § 553—that is, slightly more than the intent, purpose, or deliberateness some courts have implied. For example, one court explained:

Burdulis, 367 F.Supp.2d at 29-30 (emphasis added) (citation and footnote omitted). The court elaborated:

Id. at 30 n. 17.

Indeed, willfulness usually includes some specific intent element of knowledge or reckless disregard that the unlawful conduct is in fact forbidden by law. Under the Supreme Court's precedent, willfulness for civil enforcement actions under the Fair Labor Standards Act ("FLSA")—the standard that some courts have borrowed in interpreting § 553—requires that the defendant both acted intentionally as well as that it "either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute." Richland Shoe Co., 486 U.S. at 133, 108 S.Ct. 1677; accord Pignataro v. Port Auth. of N.Y. & N.J., 593 F.3d 265, 273 (3d Cir.2010) ("[Plaintiffs] must prove that the Port Authority knew it was violating the FLSA or acted in reckless disregard of whether it was violating the FLSA."). This knowledge or reckless disregard standard is, it should be clear, stricter than one requiring only negligence (e.g., one requiring that the defendant "acted without a reasonable basis for believing that it was complying with the statute," Richland Shoe Co., 486 U.S. at 134, 108 S.Ct. 1677 (citation omitted)). As the Third Circuit Court of Appeals has observed, "Despite th[e] allowable variation," in the meaning of "willfulness," "no court or commentator of whom we are aware has ever adopted so lax a definition of `willfulness,' in any other context," Brock v. Richland Shoe Co., 799 F.2d 80, 82 n. 5 (3d Cir.1986) (emphasis added), aff'd sub nom. McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S.Ct. 1677, that would demand only that the defendant "knew or suspected that his actions might violate" the statute, id. at 81 (quoting Coleman v. Jiffy June Farms, Inc., 458 F.2d 1139, 1142 (5th Cir. 1971), overruled, Richland Shoe Co., 486 U.S. 128, 108 S.Ct. 1677).

Several reasons suggest that § 553(c)(3)(B) requires intent and either knowledge of or reckless disregard for the illegality of the conduct, and not mere negligence. For one, because an unintentional signal interception is quite unlikely, the various mens rea distinctions Congress drew in § 553—among "willfully" in § 553(c)(3)(B), strict liability or negligence for actual or statutory damages under § 553(c)(3)(A), and nonnegligence to qualify for damages reduction under § 553(c)(3)(C)—would make little sense if not referring to what the defendant knew about its violative conduct. If intentionality plus negligence sufficed to established willfulness, then almost any violation (save for the sophisticated child-unsophisticated parent scenario) would be willful. And if willfulness required mere intentionality, then even the sophisticated child-unsophisticated parent scenario would present a tension between § 553(c)(3)(C)'s damage reduction provision and § 553(c)(3)(B)'s damage enhancement provision. There is no reason to read the statute this way, especially when most individuals will presumably understand their actions to be unlawful.30

Second, § 553 also imposes criminal penalties for willful violation; in one of the criminal provisions, the language is nearly identical to that of the enhanced damages provision. Compare § 553(b)(2) ("Any person who violates subsection (a)(1) of this section willfully and for purposes of commercial advantage or private financial gain shall be fined ... or imprisoned...." (emphasis added)), with id. § 553(c)(3)(B) ("In any case in which the court finds that the violation was committed willfully and for purposes of commercial advantage or private financial gain, the court in its discretion may increase the award of damages...." (emphasis added)). The criminal context favors a more stringent standard (i.e., of at least intentionality plus recklessness). Cf. Longview Ref. Co. v. Shore, 554 F.2d 1006, 1012-14 (Temp.Emer.Ct.App. 1977), cited in Richland Shoe Co., 799 F.2d at 82 n. 5. And finally, legislative history, to the extent that it is appropriate to consider, comports with this reading of "willfully."31

Thus, the Court concludes, willfulness for purposes of § 553(c)(3)(B)'s enhanced damages requires both the defendant's intentional signal interception as well as knowledge of or reckless disregard as to the unlawfulness of its signal interception.32 And, as courts have consistently held in other contexts, such willfulness may be proved by circumstantial evidence. See, e.g., United States v. Johnstone, 107 F.3d 200, 208 (3d Cir.1997) (citing Screws v. United States, 325 U.S. 91, 107, 65 S.Ct. 1031, 89 L.Ed. 1495 (1945) ("And in determining whether that requisite bad purpose was present the jury would be entitled to consider all the attendant circumstances-the malice of petitioners, the weapons used in the assault, its character and duration, the provocation, if any, and the like.")). This interpretation comports with the reading of the one court of appeals to have construed § 553's "willfully" in the civil context, see Comcast of Ill. X v. Multi-Vision Elecs., Inc., 491 F.3d 938, 947 (8th Cir.2007) (applying the FLSA standard and holding that "[w]illfulness is `disregard for the governing statute and an indifference to its requirements'" and that it can be inferred (quoting Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 127, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985))), as well as the appellate interpretations of willfulness under § 553's criminal provision33 and the analogous civil provision in § 605.34

Applying this standard in the default judgment context, when there has been no discovery and likely little evidence, is difficult. Joe Hand argues, in essence, that willfulness should be presumed, given (a) the defendant's default and his concomitant failure to contest the issue and (b) the nature of the interception of encrypted cable programming. The default judgment standard demands more than just a passing glance: "Normally, for an interception to be found willful, there must be some factual specificity as to how defendants intercepted the signal." Joe Hand Promotions, Inc. v. Patton, No. 10-40242, 2011 WL 6002475, at *4 n. 5 (D.Mass. Nov. 29, 2011). Thus, after Twombly and Iqbal, is the allegation that an "unauthorized interception ... was done willfully," Compl. ¶ 20, sufficient, even if the Federal Rules of Civil Procedure permit "[m]alice, intent, knowledge, and other conditions of a person's mind [to] be alleged generally," Fed.R.Civ.P. 9(b); see, e.g., United Cable Television of E. San Fernando Valley, Ltd. v. Cruz, 116 F.3d 488, at *1 (9th Cir.1997) (table opinion) (context of §§ 553 and 605)? May willfulness be established by inference from the well-pleaded facts in the Complaint (and any other evidence adduced at the default judgment stage)?35

Ultimately, the answer to that question is yes, because of the particular nature of cable distribution systems, not because of the fact of default per se. A defendant's default itself is not relevant to a finding of willfulness (beyond requiring the admission of well-pleaded factual allegations); on its own, it does not support such an inference.36

What makes the inference of willfulness permissible, notwithstanding the lack of any more specific factual basis, is the particular nature of cable programming and the means to intercept it, combined with the knowledge of the average individual. As one court quotably put it, "Signals do not descramble spontaneously, nor do television sets connect themselves to cable distribution systems." Googies Luncheonette, 77 F.Supp.2d at 490-91. In his Affidavit, Joe Hand, Jr. (Joe Hand's President), contends that Joe Hand's "programming is not and cannot be mistakenly, innocently or accidentally intercepted," and explains that it can be unlawfully intercepted by several means, including (1) the use of an unauthorized cable box that, when attached to a cable line, can descramble the programs without the providers' consent; (2) (purposeful) misrepre-sentation of a commercial establishment as a residential property to obtain residential rates; and (3) splicing a residential connection to the commercial establishment to obtain a residential rate. Hand Aff. ¶ 9.37 And, indeed, a number of courts, often in the similar context of § 605, have subscribed to the view that "[i]t is difficult ... to see how Defendants could have accidentally intercepted and exhibited the encrypted Program; the signal had to be unscrambled by some deliberate act." Joe Hand Promotions, Inc. v. McBroom, No. 09-0276, 2009 WL 5031580, at *5 (M.D.Ga. Dec. 15, 2009).

The Court agrees, but with a caveat regarding Mr. Hand's exaggerated representation in his Affidavit. The chances of intercepting pay-per-view cable programming accidentally or innocently are slim, but they are not nonexistent, and thus courts should evaluate the circumstances on a case-by-case basis.38 Because Mr. Hand's Affidavit and the relevant case law are in accord in that in most cases, "[i]n order for [the defendant] to [have] receive[d] the closed-circuit broadcast, it had to have engaged in some deliberate act, such as using an unauthorized decoder or altering the cable service in some way so as to receive and view the scrambled transmission," Time Warner Cable of N.Y.C. v. Taco Rapido Rest., 988 F.Supp. 107, 111 (E.D.N.Y.1997), the inference of intentionality, based on the remaining facts alleged in the complaint and offered by evidence, may be drawn. In other words, it is this nature of the technology at issue that permits a reasonable inference of intentionality to be drawn to substantiate what might otherwise be a conclusory allegation. See also, e.g., Joe Hand Promotions, Inc. v. Waldron, No. 11-0849, 2013 WL 1007398, at *3 (D.N.J. Mar. 13, 2013) ("The Court credits Plaintiff's contention that it would be virtually impossible to receive this encrypted broadcast inadvertently; rather, the interception must have involved actions taken with the intent to receive the Broadcast through illicit means.").

The next question, however, is whether in addition to intentionality, the further knowledge of or recklessness with regard to the violation can be inferred. Some decisions have begged this question,39 but apart from the formal imperfection of such logic, the overall approach is justified when articulated.40 "[W]ithout a full factual record, ... further analysis [is] difficult," Patton, 2011 WL 6002475, at *4, and the decision is a close one. Still, it is hard to believe that a defendant who acts intentionally to intercept cable programming unlawfully does not know the illegality of his actions (or at least recklessly disregards the distinct possibility of unlawfulness). The recognition of the intentional, unauthorized interception of programming as theft is probably within the ken of the average individual.41 Thus, the Court holds that the likelihood of a violation's being intentional and, further, its likelihood of being knowingly illegal, suffices to establish a presumption of willfulness for the purposes of pleading, and, thus, default judgment.42

In this case, Joe Hand has alleged that the "unauthorized interception ... was done willfully." Compl. ¶ 20. Because accidental interception of the Match was highly unlikely—such an accident would have had to affect all four of the televisions set up in different areas throughout Cafe Nostalgie and all of which were showing the Match. Szlezak Aff. 1. The Court thus finds, for present purposes, that the interception was intentional. And, finally, for the reasons discussed above, the Court will accept for now that the violation was willful.

b. Whether "the violation was committed... for purposes of commercial advantage or private financial gain"

To award the plaintiff enhanced damages, the court must also find that the defendant acted "for purposes of commercial advantage or private financial gain." 47 U.S.C. § 553(c)(3)(B). The courts of appeals have not addressed the meaning of this requirement, but it would seem to be satisfied by a broad set of circumstances. Cf. Cablevision Sys. N.Y.C. Corp. v. Lokshin, 980 F.Supp. 107, 114-15 (E.D.N.Y. 1997) (discussing a difference between § 553(c)(3)(B) and the analogous provision in § 605 that establishes a particular way in which § 553(c)(3)(B) is broader); Burdulis, 367 F.Supp.2d at 31-32 (same, and relying on Lokshin).

In this case, the Complaint establishes that Cafe Nostalgie is a commercial establishment, and Mr. Szlezak's Affidavit establishes that Cafe Nostalgie contains a bar area for ordering drinks, "an area made to look like the outside of a restaurant with outdoor seating," and four televisions. Szlezak Aff. 1. As Mr. Hand opines in his Affidavit, often "the very purpose of pirating ... programming" is "to lure or retain patrons who seek to be entertained by [it]." Hand Aff. ¶ 17. From Café Nostalgie's four televisions all showing the Match, the Court can infer such a purpose here. See also Hand Aff. ¶ 18. "Because the intercepted signal was shown at a restaurant as an inducement for patrons to purchase food and beverages, the Court has no difficulty finding that the violation was made for the[] purposes ... `of commercial advantage or private financial gain.'" Patton, 2011 WL 6002475, at *4; see also, e.g., Waldron, 2013 WL 1007398, at *3 ("[B]ecause Defendants displayed the Broadcast at their place of business, the Court may infer that Defendants' conduct was `for the purposes of direct or indirect commercial advantage or indirect pecuniary gain'...."); Joe Hand Promotions, Inc. v. Canipe, No. 12-0198, 2013 WL 1773741, at *4 (W.D.N.C. Apr. 25, 2013) (same reasoning).

c. Measure of enhanced damages

Courts have adopted a variety of approaches for deciding how much to award in enhanced damages. Some courts, with little more than a brief survey of other decisions, have granted awards that "appear[] to be somewhat arbitrary and, for the most part, not based on any specific articulated factors." Burdulis, 367 F.Supp.2d at 33.43 Other courts, still "approach[ing] the enhanced damages analysis in a more cursory manner" employ a multiplier to the statutory damages award. Waldron, 2013 WL 1007398, at *8 (citing cases). Many courts look deeper through multifactor tests,44 some of which balance "[t]he need for deterrence ... against the harm to the defendant's business if significant damages are assessed."45

Having recognized the disgorgement of profits as an appropriate consideration under the statutory damages inquiry, see text accompanying note 26, this Court will take a different approach and focus on the language and apparent aims of § 553's enhanced damages provision. Although they are triggering factors, willfulness and "commercial advantage or private financial gain," 47 U.S.C. § 553(c)(3)(B), together with the statute's legislative history and the foregoing analysis of § 553's structure, suggest that the primary concern with the imposition of enhanced damages is deterrence. The factors a court should consider in order to produce a sensible enhancement of the actual or statutory damages award, then, should likewise target deterrence.

First, "Congress enacted § 553 specifically to combat the novel phenomenon of cable piracy," and "[t]he legislative history to the Cable Act supports th[e] interpretation" that Congress "created strict new penalties to deter cable pirates who would otherwise exploit this phenomenon." TKR Cable Co., 267 F.3d at 203-04; accord Prostar v. Massachi, 239 F.3d 669, 673 (5th Cir.2001) ("[O]ne of Congress's principal objectives was to discourage theft of cable services...."); H.R.Rep. No. 98-934, at 83, reprinted in 1984 U.S.C.C.A.N. at 4720 ("The Committee is extremely concerned with a problem which is increasingly plaguing the cable industry-the theft of cable service...."). Accordingly, Congress appears to have been concerned not just with the fact that "[t]heft of services is depriving the cable industry of millions of dollars of revenue each year," but also that such theft "creates an unfair burden on cable subscribers who are forced to subsidize the benefits that other individuals are getting by receiving cable service without paying for it." H.R.Rep. No. 98-934, at 83, reprinted in 1984 U.S.C.C.A.N. at 4720. Because willful violations of § 553 constitute theft,46 the legislative history suggests that the deterrence rationale is the central driver of enhanced damages. "An additional award for willfulness will put violators `on notice that it costs less to obey the ... laws than to violate them.'" Googies Luncheonette, 77 F.Supp.2d at 491 (quoting Rodgers v. Eighty Four Lumber Co., 623 F.Supp. 889, 892 (W.D.Pa.1985) (violation of copyright laws)); see also, e.g., J & J Sports Prods., Inc. v. Castrillon, No. 07-02946, 2009 WL 1033364, at *3 (E.D.N.Y. Apr. 16, 2009) ("Absent substantial financial penalties, the defendant will likely continue to illegally display the plaintiff's programming and other such establishments will follow suit. The plaintiff cannot practicably investigate all these infractions, nor should they be expected to do so." (citation omitted)).

Second, the "commercial advantage or private financial gain" prong suggests some consideration at the enhanced damages stage of whether and how the defendant profited from its violation. But if—as this Court views as the correct method of interpreting § 553—a court has awarded profits made on account of the violation under the actual or statutory damages rubric, there is no reason to perform that analysis again under the enhanced damages provision. Further, another element in the statute's structure suggests that specific deterrence also impels the "commercial advantage or private financial gain" inquiry. Section 553's criminal penalties for willful violation—a fine of up to $1000 and/or up to six months' imprisonment, 47 U.S.C. § 553(b)(1)—rise steeply if the defendant also acts "for purposes of commercial advantage or private gain" to a fine of up to $50,000 and/or up to two years' imprisonment for the first violation and up to $100,000 and/or five years' imprisonment "for any subsequent offense," id. § 553(b)(2).

These considerations suggest that the Court should look to factors relevant to deterrence to determine how to enhance statutory damages. The application to the actual or statutory damages award of a simple multiplier, the value of which may be adjusted as the case demands, best achieves the dual goals of general and specific deterrence. Indeed, courts applying multipliers "have awarded anywhere from three to six times the statutory damages award for enhanced damages." J & J Sports Prods., Inc. v. Ribeiro, 562 F.Supp.2d 498, 502 (S.D.N.Y.2008). The use of a multiplier both vindicates Congress's interest in generally deterring theft of cable services (as reflected in the "willfully" requirement), as well as addresses § 553(c)(3)(B)'s "commercial advantage or private financial gain" prerequisite by forcing the defendant to disgorge a multiple of its profits (and thus also specifically deters). A multiplier also addresses "the difficulty in detecting the unlawful acquisition of the broadcast" and "the widespread loss that occurs through pirating license transmissions," J&J Sports Prods., Inc. v. Stone, No. 13-0936, 2013 WL 5169667, at *1 (D.Ariz. Sept. 13, 2013) (§ 605 context), concerns would seem to be present in every case and that should not provide the basis for a separate, specific-deterrence consideration.

The main case—specific (and thus specific deterrence) factor—although the Court will not attempt to foreclose the consideration of other factors in an appropriate case—is whether, and to what extent, the defendant is a repeat violator.47 The enhanced damages provision itself may be read as endorsing a formulaic approach—"the court in its discretion may increase the award of damages, whether actual or statutory." 47 U.S.C. § 553(c)(3)(B) (emphasis added). Further, the criminal provision states that "the prohibited activity ... as it applies to each such device shall be deemed a separate violation," id. § 553(b)(3), thereby creating a multiplier of penalties under the enhanced criminal provision, which allows a fine of up to $100,000 and/or five years "for any subsequent offense," id. § 553(b)(2).

In this case, there is no allegation or evidence that Cafe Nostalgie or Victor Yakubets is a repeat violator. And if either is "the Blackbeard of pirates, [Joe Hand] makes no attempt to portray it as such, and to the contrary, the act of piracy attributed to" them would seem to be "as routine as they come." Joe Hand Promotions, Inc. v. Streshly, 655 F.Supp.2d 1136, 1139 (S.D.Cal.2009). The Court thus concludes that a minimum multiplier of three is appropriate and will award Joe Hand treble statutory damages as enhanced damages, for an additional award of $3660 under § 553(c)(3)(B).48

B. Individual Vicarious Liability under 47 U.S.C. § 553

The final issue is whether Mr. Yakubets may be held vicariously and therefore jointly liable for the violation of § 553. Conceding that "an additional layer of analysis is required," Joe Hand argues that "[f]or an individual to be liable for piracy, Plaintiff must demonstrate that the defendant had `a right and ability to supervise the violations and that he had a strong financial interest in such activities.'" Br. 6 (quoting J & J Sports Prods., Inc. v. J.R.'Z Neighborhood Sports Grille, Inc., No. 09-3141, 2010 WL 1838432, at *2 (D.S.C. R & R Apr. 5, 2010) (citation and alteration omitted), adopted, 2010 WL 1838428 (May 6, 2010)). Mr. Yakubets meets this standard, Joe Hand contends, because he "was an individual with a `right and ability to supervise' the violations and a strong financial interest in the violation." Br. 6-7.

Courts have expressed some skepticism about the applicability of the standard Joe Hand advocates, with regard to both (1) whether and (2) if so, how, to apply it. There is no question that an individual can be held jointly liable with his corporation. "The fact that an officer is acting for a corporation also may make the corporation vicariously or secondarily liable under the doctrine of respondeat superior; it does not however relieve the individual of his responsibility." Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir.1978) (citing Zubik v. Zubik, 384 F.2d 267, 275 (3d Cir.1967)); e.g., Mead Johnson & Co. v. Baby's Formula Serv., Inc., 402 F.2d 19, 23 (5th Cir.1968) ("The fact that the persons thus acting are acting for a corporation also, of course, may make the corporation liable under the doctrine of respondeat superior."). In Zubik v. Zubik, 384 F.2d 267, the Third Circuit Court of Appeals explained:

Id. at 275 (citation omitted); accord Chanel, Inc. v. It. Activewear of Fl., Inc., 931 F.2d 1472, 1477-78 (11th Cir.1991) ("[A] corporation can act only through individuals.... If an individual actively and knowingly caused the infringement, he is personally liable....").

Presumably because Joe Hand cannot say for certain that Mr. Yakubets himself participated in the § 553 violation, Joe Hand contends, in essence, that Mr. Yakubets is vicariously liable.

1. The Standard for Individual Vicarious Liability under 47 U.S.C. § 553

a. Whether the Softel standard applies to the § 553 context

Neither the Supreme Court nor any of the courts of appeals has addressed the issue of vicarious liability under § 553.49 The standard Joe Hand offers—a "right and ability to supervise" plus a direct financial interest in the conduct—has its origin in the Second Circuit Court of Appeals' decision in the copyright context in Softel, Inc. v. Dragon Medical & Scientific Communications, Inc., 118 F.3d 955 (2d Cir.1997).50 The Softel court stated:

Softel, 118 F.3d at 971-72 (alterations in original) (emphases added).

One can consider the wisdom of importing the Softel test into the § 553 context. Several district courts have stated that they are "not convinced that the test for vicarious liability under the Copyright Act should be extended to [§ 553]" especially where the plaintiff did "not address the important distinction that the Copyright Act and [§ 553] are different statutes" that may not share "a common legislative history."51

The Court does not perceive these concerns as impediments to borrowing the Softel test, for two primary reasons. First, the Supreme Court has noted that "[a]lthough `[t]he Copyright Act does not expressly render anyone liable for infringement committed by another,' these doctrines of secondary liability [(vicarious and contributory)] emerged from common law principles and are well established in the law." Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930-31, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005) (emphasis added) (quoting Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 434, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984)); see also Sony Corp., 464 U.S. at 435, 104 S.Ct. 774 ("The absence of such express language in the copyright statute does not preclude the imposition of liability for copyright infringements on certain parties who have not themselves engaged in the infringing activity. For vicarious liability is imposed in virtually all areas of the law. ..." (emphasis added)); Shapiro, 316 F.2d at 307 (reasoning that vicarious liability should apply in the copyright context because, inter alia, "[i]t is quite clear... that the normal agency rule of respondeat superior applies to copyright infringement by a servant within the scope of his employment," and "[r]ealistically, the courts have not drawn a rigid line between the strict cases of agency, and those of independent contract, license, and lease" (citing M. Witmark & Sons v. Calloway, 22 F.2d 412, 414 (E.D.Tenn.1927))); M. Witmark & Sons, 22 F.2d at 414 ("The rule of the common law applies, to wit, that the master is civilly liable in damages for the wrongful act of his servant in the transaction of the business which he was employed to do, although the particular act may have been done without express authority from the master, or even against his orders."). The application of the Softel test is therefore not so much an extension of copyright law into the § 553 context, but rather the borrowing of a well-developed doctrine, i.e., vicarious liability, based on common legal principles.

Second, the copyright statute is not in fact so different from § 553. The general copyright infringement statute bears a striking resemblance to § 553 and also provides for actual damages, statutory damages, enhanced damages for willful infringement, and reduced damages for accidental, nonnegligent infringement, and does so with a similar structure and similar wording. See 17 U.S.C. § 504(b), (c).52 The Court will therefore apply the standard reiterated in Softel as an appropriate test for assessing vicarious liability under 47 U.S.C. § 553.

b. The substance of the Softel standard

Even when accepting or assuming that the Softel standard applies, courts demonstrate differing views as to what the Softel standard requires. Under the first prong, the defendant must have a right or ability to supervise or authorize the violative behavior, but he need not have actually supervised, given authorization, or even had knowledge of the violative behavior. See, e.g., Shapiro, 316 F.2d at 306 (holding Green vicariously liable even though "Green did not actively participate in the sale of the records and that it had no knowledge of the unauthorized manufacture of the records."); id. at 308 ("The imposition of liability upon the Green Company, even in the absence of an intention to infringe or knowledge of infringement, is not unusual...."); Gershwin Publ'g. Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir.1971) (explaining that the Shapiro court "found the policies of the copyright law would be best effectuated if Green were held liable, even in the absence of actual knowledge that the copyright monopoly was being impaired, for its failure to police the conduct of the primary infringer").53

The "direct financial interest" prong is more difficult to parse and apply. The Softel court refused to find vicarious liability when the only relevant evidence of a "`direct' financial interest" in the illegal activity was that the individual defendant was president and a shareholder of the codefendant corporation, because that required inference would be too attenuated. See 118 F.3d at 971-72; accord, e.g., Yue v. Chordiant Software, Inc., No. 08-0019, 2009 WL 4931679, at *7 (N.D.Cal. Dec. 21, 2009) ("The mere fact that a defendant is an officer and shareholder of an infringing corporation is `too attenuated' to show a "`direct financial interest in the exploitation of copyrighted materials.'"" (quoting Softel, 118 F.3d at 971)). By contrast, the Softel court pointed explicitly to Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, in which the Second Circuit Court of Appeals had earlier held that the defendant corporation's contractual entitlement to 10-12% of the infringer's gross receipts was "a most definite financial interest in the success of [the infringer's] concession" permitting the imposition of vicarious liability. Id. at 306-08.

Although the evidence in Softel was insufficient, Shapiro's facts—of a definite percentage of revenue—have not been interpreted as setting the baseline for a "direct financial interest." As the Ninth Circuit Court of Appeals has explained, "The essential aspect of the `direct financial benefit' inquiry is whether there is a causal relationship between the infringing activity and any financial benefit a defendant reaps, regardless of how substantial the benefit is in proportion to a defendant's overall profits." Ellison v. Robertson, 357 F.3d 1072, 1079 (9th Cir.2004). Thus, if the infringement causes a financial benefit to accrue to the defendant, the "direct financial benefit" requirement is met. Cf. also, e.g., Parker v. Google, 242 Fed.Appx. 833, 837 (3d Cir.2007) ("Financial benefit exists where the availability of infringing material acts as a draw for customers." (quoting Ellison, 357 F.3d at 1078)). But it is not met, by contrast, if the defendant receives only "flat, periodic payments for service from a person engaging in infringing activity." Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1118 (9th Cir.2007) (quoting legislative history); see also, e.g., Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 263 (9th Cir.1996). See generally 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 12.04[A][2] (Lexis 2013).

In the context of cases like Joe Hand's, then, if defendants like Mr. Yakubets are merely officers of the infringing establishment and receive a set salary, the "direct financial benefit" requirement cannot be met. If, on the other hand, their compensation increases with the establishment's profits—i.e., from greater profits the night the Match was illegally intercepted and exhibited at Cafe Nostalgie—the requirement could be met.54 The rule for vicarious liability under § 553 can be stated, then, as follows: An individual (or business entity) may be held vicariously liable for violating § 553 if he (1) has the right and ability to supervise the violative activity, although he need not actually be supervising, because he need not know of the violative activity, and (2) has a direct financial interest in the violation, i.e., financial benefits, even if not proportional or precisely calculable, that directly flow from the violative activity.

2. Requirements for Pleading Individual Vicarious Liability

What makes cases like the one here close, however, is the arguably ambiguous or conclusory nature of the relevant allegations (compounded, of course, by the lack of evidence concomitant with the default judgment context). For instance, Joe Hand's Complaint makes the following allegations about Mr. Yakubets:

In addition, Joe Hand offers as evidence Cafe Nostalgie's liquor license, which identifies Victor Yakubets as President, Secretary/Treasurer, Director, Stockholder, and Manager/Steward (only one other individual appears on the license, Yana Vselubsky, who is identified only as Stockholder). What is required to plead vicarious liability (and thus to permit a default judgment), and has Joe Hand met those requirements here?

There are a number of discernible territories in the case law. A number of courts applying the Softel standard at the default judgment stage have held such allegations sufficient, usually without much reasoning.55 But some courts have applied the Twombly-Iqbal standard to find the pleading of "mere ownership of the offending entity," inadequate, as in J & J Sports Productions, Inc. v. 291 Bar & Lounge, LLC, 648 F.Supp.2d 469, 473 (E.D.N.Y. 2009). Similarly, other courts, as in J & J Sports Productions, Inc. v. MayrealII, LLC, 849 F.Supp.2d 586 (D.Md.2012), have found insufficient the formulaic recitation of the § 553 or § 605 cause of action plus the allegation "upon information and belief," that the individuals targeted for vicarious liability "are `officer[s], director[s], shareholder[s], employee[s], agent[s], and/or other representative[s]'" of the offending corporate defendant. Id. at 591-92 (alterations in original) (quoting the complaint).56

Those latter cases present difficult questions regarding the absence of one or both of two types of allegations: (1) the allegation of a right and ability to supervise and a direct financial interest in the violation, and (2) a factual allegation that permits the court reasonably to infer that the allegation of a right and ability to supervise plus a financial interest is not merely conclusory, but plausible enough to allow the plaintiff to proceed on its complaint. (And, of course, that is the standard at the default judgment stage.) One position is that satisfying the first type of allegation permits the case to go forward against a motion to dismiss.57 Another is that both are required, because the first without the second renders the first conclusory and therefore insufficient. E.g., MayrealII, 849 F.Supp.2d at 592. In MayrealII, for example, the court explained that

Id. (footnote omitted) (alterations in original).

Given that the Softel standard does not require actual knowledge or supervision, the MayrealII court's point must be that there is no specific factual content that would allow a court reasonably to infer that the plaintiffs could exercise control over the violation and that they had a financial interest in the violation. As one court has held, a "general statement of ownership is insufficient to satisfy the threshold for a finding of individual liability," J&J Sports Prods., Inc. v. Fisher, No. 12-0790, 2013 WL 4482405, at *3 (S.D.Ohio Aug. 20, 2013); in the words of another, "generalized allegations" that an individual defendant was "an `officer, director, shareholder and/or principal'" were insufficient because

J & J Sports Productions, Inc. v. Daley, No. 06-0238, 2007 WL 7135707, at *3-4 (E.D.N.Y. Feb. 15, 2007).

In the present case, the Court would apply such reasoning to find that the allegation that Mr. Yakubets "specifically directed the employees of Cafe Nostalgie to unlawfully intercept and broadcast Plaintiff's Program at Cafe Nostalgie," Compl. ¶ 11 conclusory; in fact, it is a disjunctive pleading ending with, "or that the actions of the employees of Cafe Nostalgie are directly imputable to Defendants [sic] Victor Yakubets by virtue of their acknowledged responsibility for the actions of Cafe Nostalgie." Compl. ¶ 11 (emphasis added). As courts in several of the decisions discussed above have observed, there is simply no factual content in the Complaint that would put Mr. Yakubets in Cafe Nostalgie on the night of August 21, 2010, or that would permit the reasonable inference that he was there and authorized the violation.

But Joe Hand does not need that much. It also alleges (1) that Mr. Yakubets "had the right and ability to supervise the activities of Cafe Nostalgie, which included the unlawful interception of Plaintiff's Program," Compl. ¶ 9, and that he "had an obvious and direct financial interest in the activities of Cafe Nostalgie, which included the unlawful interception of Plaintiff's Program," Compl. ¶ 12; and (2) a liquor license with information permitting the reasonable inference that the former allegations not conclusory, but plausible, see Compl. ¶ 8.

In MayrealII, the court cast aside the liquor license evidence; it reasoned that "the only specific factual allegations," namely, that both individual defendants were "named on Mayreal's liquor license, and that [one was] Mayreal's resident agent," were insufficient. 849 F.Supp.2d at 592 (emphasis added). And, in fact, all the liquor license showed was that the individual defendants were "[l]icensee(s)."58

Cafe Nostalgie's liquor license, by contrast, identifies Mr. Yakubets as Cafe Nostalgie's President, Secretary/Treasurer, Director, Stockholder, and Manager/Steward.59 The significance of the license is that it allows Joe Hand to plead, on information and belief, not that Mr. Yakubets was simply some officer of Cafe Nostalgie, and falter with an alternative or disjunctive allegation, but rather that Mr. Yakubets was all of President, Secretary/Treasurer, Director, Stockholder, and Manager/Steward.60 From this allegation, the Court can make the reasonable inference that Mr. Yakubets had a direct financial interest in the conduct that violated § 553—i.e., that financial benefits flowed to him because of the violative conduct. While his being a stockholder alone might not be enough under Softel, as President, Secretary/Treasurer, Director, and Manager/Steward of a commercial establishment (not a Fortune 500 company, for instance), Mr. Yakubets presumably has the authority to control where Cafe Nostalgie's funds go. This inference is all the more reasonable because the individual defendant's financial position vis-à-vis the offending commercial establishment is likely information difficult to obtain without discovery.61

The Court holds that the right and an ability to control plus a direct financial benefit, if not sufficiently pled by the allegations per se, may additionally be inferred consistent with the Court's "judicial experience and common sense" under Iqbal, see 556 U.S. at 679, 129 S.Ct. 1937. Joe Hand's Complaint would therefore survive a motion to dismiss, because, "although admittedly formulaic," it "states a claim to relief against each of the individual Defendants that is `plausible on its face.'" J & J Sports Prods., Inc. v. L & J Grp., LLC, No. 09-3118, 2010 WL 816719, at *1-2 (D.Md. Mar. 4, 2010) (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937).62 And if such allegations suffice at the pleading stage, they should also suffice at the default judgment stage. Joe Hand may hold Mr. Yakubets vicariously liable for Cafe Nostalgie's violation of § 553.

But the closeness and narrowness of the holding here must be emphasized. Conclusory allegations "on information and belief will generally not be enough, even at the default judgment stage, to allow the imposition of vicarious liability." See, e.g., 291 Bar & Lounge, 648 F.Supp.2d at 473; Mayreal II, 849 F.Supp.2d at 591-92. What tips the scales here is that Cafe Nostalgie's liquor license—not the fact of the liquor license, but what it specifically states about Mr. Yakubets's role—fills an otherwise empty allegation made "on information and belief" with such factual content as permits the inference of Mr. Yakubets's right and ability to supervise paired with a direct financial benefit."

3. The Nature and Extent of Vicarious Liability

Nonetheless, Joe Hand may not hold Cafe Nostalgie liable for the entire award in this case. Although, to this Court's knowledge, no court finding vicarious liability has discussed the nature and extent of that liability—those courts simply allow joint and several liability for the award— the well-established rule in copyright law, from which the Softel standard derives, does not permit wholesale joint and several liability on account of vicarious liability.

Under 17 U.S.C. § 504, see supra note 52 and accompanying text, "a defendant in a copyright infringement action may be liable for both `actual damages' and `profits attributable to infringement.'" Nelson-Salabes, Inc. v. Morningside Dev., LLC, 284 F.3d 505, 517 (4th Cir.2002) (quoting 17 U.S.C. § 504). But vicarious liability does not extend beyond actual damages. Instead, as one court has explained:

MCA, Inc. v. Wilson, 677 F.2d 180, 186 (2d Cir.1981) (citations omitted) (citing cases); accord, e.g., Nelson-Salabes, 284 F.3d at 517; 3 Nimmer, supra, § 12.04[C] [3] & n. 387 (citing cases).

While the actual damages estimation component of § 553's statutory damages, see supra subsection III.A.1.a, may be similar enough to actual damages in the copyright context to warrant joint and several vicarious liability, there should be no joint liability for the profit component of § 553's statutory damages. Nor, for similar reasons, should there be joint liability for enhanced damages under § 553, which are not true damages, but rather penalties aimed to deter and which depend on willfulness, whereas the "right and ability to supervise" standard does not even require knowledge.

In this case, then, Mr. Yakubets is jointly and severally liable for the $500 license fee Joe Hand would have charged Cafe Nostalgie because this figure represents the actual damages estimation of the statutory damages award. But while the inference that Joe Hand shared in Cafe Nostalgie's profits is reasonable as a threshold matter to permit vicarious liability, there is no indication or evidence at all of how much of the profits he may have shared, and the Court will not speculate. Nor is there any evidence that Mr. Yakubets actually supervised or authorized the violation, or otherwise participated in it; thus, he cannot be personally liable for willful infringement nor vicariously liable for enhanced damages for willful infringement. The Court therefore holds that Mr. Yakubets is jointly and severally liable up to $500 only.

C. Leave to File Motion for Attorneys' Fees and Costs

"The court may direct the recovery of full costs, including awarding reasonable attorneys' fees to an aggrieved party who prevails." 47 U.S.C. § 553(c)(2)(C) (emphasis added). An award of attorneys' fees and costs under § 553 is discretionary rather than mandatory. E.g., Burdulis, 460 F.3d at 170 n. 2; Int'l Cablevision, Inc. v. Sykes, 997 F.2d 998, 1009 (2d Cir.1993); Yakubets, 2013 WL 5224123, at *4 & n. 8. Given the procedural history of this case, Joe Hand should be prepared to address both (a) why Mr. Riley's fees are reasonable and (b) the legal issue of whether the rule that "a judge [not] decrease a fee award based on factors not raised at all by the adverse party," Bell v. United Princeton Props., Inc., 884 F.2d 713 (3d Cir.1989), applies to the default judgment context.

IV. Conclusion

Joe Hand's Motion for Default Judgment (Docket No. 14) is granted for, and consistent with, the foregoing reasons and discussion. Joe Hand is awarded $4880 in damages ($1220 statutory, based on an estimate of $500 actual and $720 in profits, plus treble the statutory damages as enhanced damages). Victor Yakubets is jointly and severally liable for $500 of that amount; Cafe Nostalgie is severally liable for the remainder. Joe Hand is granted leave to file a motion for attorneys' fees and costs.

An Order consistent with this Memorandum follows.

ORDER

AND NOW, this 11th day of March, 2014, upon consideration of Joe Hand Promotions, Inc.'s ("Joe Hand") Renewed Motion for Default Judgment (Docket No. 14), it is HEREBY ORDERED that the Motion is GRANTED such that: