IP Law Daily, COPYRIGHT—N.D. Cal.: Child’s play: owner of CocoMelon YouTube channel, after clean sweep at trial, now earns multi-million dollar attorney fees award, (Aug 8, 2024)

By Matthew Hersh, J.D.

A competing children-oriented YouTube channel purloined its animated characters, submitted false takedown notices, and fabricated evidence.

The owner of a top-ranked YouTube channel that features animated characters designed to appeal to children is entitled to recoup $5.9 million in attorney fees after a jury ruled that a competitor purloined its work, the federal court in San Francisco. The court, in granting the attorney fee petition, found that the competing channel made several unreasonable arguments during the litigation, fabricated evidence, and failed to admit clear cases of infringement in its responses to requests for admission (Moonbug Entertainment Ltd. v. Babybus (Fujian) Network Technology Co., Ltd., No. 3:21-cv-06536-EMC (N.D. Cal. Aug. 6, 2024)).

The case arises out of a battle between two popular YouTube channels. Moonbug Entertainment operates the CoComelon channel, a top-ranked Kids YouTube channel that features animated videos of a child character named JJ and his family. Babybus Network Technology Co. runs a competing YouTube channel with videos featuring a character named Super JoJo and his family.

Moonbug, believing that a number of its competitors’ videos infringed on its copyright music, filed take-down notices with YouTube and sued Babybus for infringement. Babybus, in turn, asserted affirmative defenses of fair use and copyright misuse, and also alleged that Moonbug made knowing misrepresentations in its takedown notices to YouTube in violation of the Digital Millennium Copyright Act.

The case went through several rounds in the courts. In February of 2022, the district court struck Babybus’s defenses of fair use and copyright misuse. In July of last year, a jury returned a verdict for Moonbug on both the copyright infringement and misrepresentation counts, and it awarded Moonbug $17,718,114 in damages. The court then denied Babybus’s post-trial motion, finding that there was ample evidence for the jury to conclude that there was substantial similarity and copyright misuse and to award the amount of money that it did.

Moonbug then moved for an award of attorney fees, leading to this opinion.

Attorney fees. The court awarded just short of $6 million in attorney fees to Moonbug with respect to the copyright infringement claim. In considering attorney fee petitions in copyright cases, the Supreme Court instructs courts to consider the factors of frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case), and the need in particular circumstances to advance considerations of compensation and deterrence. The Ninth Circuit has added the following considerations: the degree of success obtained, the purposes of the Copyright Act, and whether the chilling effect of attorney's fees may be too great or impose an inequitable burden on an impecunious plaintiff. Attorney fees were awarded under this standard, the court found.

The court first found that Babybus’s defense was not frivolous and—for the most part—not objectively unreasonable. BabyBus set forth reasonable arguments in its defense, the court found, mainly focusing on the belief that the Moonbug works and characters were comprised of unprotectable elements that were fairly common in portraying children and in children’s television narratives. Importantly, the court noted, Moonbug did not prevail on its motion for summary judgment on the issue. But several specific aspects of BabyBus’s defense were objectively unreasonable, according to the court. For example, initially, BabyBus denied any copying of Cocomelon, but over one year later, conceded willful infringement of six videos. Additionally, BabyBus’s independent development defense was objectively unreasonable—at least in part because it fabricated evidence. On balance, the court found, attorney fees were warranted “given Moonbug’s nearly perfect success at trial and BabyBus’s several unreasonable arguments throughout the case.”

The court also awarded attorney fees to Moonbug with respect to its copyright misuse claim. This fee petition arose out of Moonbug’s successful claim that BabyBus made knowingly false representations in DMCA takedown notices. BabyBus argued that the language of the DMCA awards attorney fees only as a form of damages, as opposed to a separate award, and thus the attorney fees should have been determined by the jury. But the court found this argument “meritless,” noting that BabyBus cited to no authority that courts should present post-verdict attorney fee awards to a jury.

Finally, the court also awarded Moonbug attorney fees related to BabyBus’s denial of a request for admission—although only in part. Under the rules of civil procedure, if a party denies a request for admission and the requesting party later proves the matter to be true, the requesting party may move for attorney fees incurred in making that proof. Here, BabyBus initially denied substantial similarity for eight works—works that it later conceded were willfully infringed. Attorney fees related to BabyBus’s failure to admit substantial similarity for these songs were therefore appropriate, the court concluded.

Order assigning rights of payments from third parties. The court refused to order BabyBus to hand over the rights to collect revenue streams from third parties. The court found this request premature in light of BabyBus’s pending appeal to the Ninth Circuit. It would be appropriate to “address future concerns about [BabyBus’s] ability to pay if and when such issue becomes salient,” the court found.

The Case is No. 3:21-cv-06536-EMC.

Judge: Chen, E.

Attorneys: John Sprangers (Horvitz & Levy LLP) for Moonbug Entertainment Ltd. Babybus (Fujian) Network Technology Co., Ltd for Babybus (Fujian) Network Technology Co., Ltd.

Companies: Moonbug Entertainment Ltd.; Babybus (Fujian) Network Technology Co., Ltd.

Cases: Copyright TechnologyInternet CaliforniaNews GCNNews