Update on the Feraud v. Viewfinder case in our Law Journal
By: Travis S. Borquez, Sandra Day O’ Connor College of Law, Arizona State University
SARL Louis Feraud Int’l. v. Viewfinder, Inc., 489 F.3d 474 (2nd Cir. 2007)
Under New York law, a foreign judgment will not be recognized if the cause of action on which the judgment is based is repugnant to the public policy of New York. The U.S. District Court for the Southern District of New York found that a French judgment that violates the First Amendment should, therefore, not be recognized. The U.S. Court of Appeals for the 2nd Circuit held that in order for the District Court to determine the French cause of action repugnant to New York law, the District Court must first determine: 1- what level of protection public policy in New York provides under the First Amendment, and 2- whether the foreign law provides comparable protections. Because the District Court must first determine whether “fair use” factors provide First Amendment protection as a matter of law, the lower judgment is vacated and remanded for further proceedings.
BACKGROUND
In SARL Louis Feraud Int’l. v. Viewfinder, Inc., 406 F.Supp.2d 274 (S.D.N.Y. 2005), Feraud sought to enforce a French default judgment after Viewfinder failed to answer the complaint or appear in the foreign proceeding. Id. at 277. The French judgment consisted of costs, damages of 1mm francs, and a fine of 50,000 francs per diem for failure to remove the images of Feraud’s designs from Viewfinder’s website. Id. (The USD equivalent of $183,007.42 at the time of the foreign judgment.) The District Court granted defendant Viewfinder’s motion for summary judgment, finding that the judgment was repugnant to the First Amendment. Id. at 276.
In Viewfinder’s motion to dismiss, Viewfinder alternatively moved for summary judgment based on lack of finality of the French judgment and repugnance of the foreign compensatory remedy. Id. Viewfinder argued the remedy was repugnant because it was excessive and inconsist with American copyright and intellectual property law, and counter to the protections afforded by the First Amendment. Id. at 278. The District Court rejected all Viewfinder’s claims except the Constitutional argument, and granted the motions to dismiss and summary judgment. Id. at 276.
While the District Court emphasized the importance of “comity” and respect for the judicial acts of foreign nations, the court nevertheless found the foreign judgment repugnant to the public policy of New York. Id. at 279. (“New York courts have refused to enforce English libel judgments that would be inconsistent with the First Amendment and the equivalent provision of the New York constitution.”) C.f. Bachchan v. India Abroad Publ’ns Inc., 154 Misc.2d 228 (Sup. Ct., NY Co.,1992) The Court found Viewfinder’s publication of images containing Feraud’s designs as providing to the public information about which it has “considerable interest.” Id. at 285. Moreover, even if plaintiff had copyright protections, the images are ‘newsworthy matters’ afforded a fair use exception under the First Amendment. Id. at 284. Accordingly, the District Court held the French judgment impinged upon free speech rights and was repugnant to the public policy of New York and the “special place” American legal tradition places the freedom of speech. Id. at 281-282.
DISCUSSION
The 2nd Circuit found the District Court erred by failing to determine:1) what level of First Amendment protection a fair use exception to Viewfinder’s activities New York public policy requires, Viewfinder, 489 F.3d at 481-82 (determining fair use requires “balancing the competing interests of copyright laws and the First Amendment . . . before a court can conclude that a foreign copyright judgment is repugnant to public policy”), and 2) whether French copyright laws provide comparable levels of protection under the fair use exception, Id., assuming that Viewfinder’s unauthorized use of Feraud’s designs would have constituted fair use under US law.
The District Court erred in permitting Viewfinder’s unauthorized publication of Feraud’s images, Id. at 479 (“We cannot second-guess the French court’s finding that Viewfinder’s actions were ‘without the necessary authorization’.”), because they are ‘newsworthy matters,’ Id. at 482, See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539 (Nation’s use of verbatim quotes from upcoming Gerald Ford memoir regarding Watergate scandal was not fair use even though material related to matter of public importance). The 2nd Circuit determined that being a newsworthy matter is but one factor in determining whether a fair use exception to copyright law applies. Viewfinder, 489 F.3d at 483 (under 17 U.S.C. § 107, factors in determining fair use are: 1) purpose of the use, 2) nature of the work, 3) portion used in relation to the whole work, and 4) the effect of the use on the copyrighted work’s value, potential and actual). Id. at 482. The District Court must further develop the factual record and using all fair use factors, determine whether Viewfinder avails itself of the fair use exception of the First Amendment which permits unauthorized publication of otherwise protected materials. Id. at 483.
On remand, if the District Court determines Viewfinder’s actions fall under the fair use exception of United States law, the court must then determine whether French copyright law provides comparable fair use protections to copyright infringers. Id. at 483. If Viewfinder’s actions have no fair use protection under U.S. law, the comparison of French law becomes moot. Id. (if Viewfinder’s publication in this case is not fair use under U.S. law, then French law prohibiting the conduct cannot be “repugnant to public policy”). Alternatively, if Viewfinder’s publication of images containing Feraud’s designs has fair use protections, the District Court must identify which French statutes underlie the foreign judgment. Id. at 478. Only then may the court compare protections afforded copyright infringers by New York and French law and whether French law is repugnant to the public policy of New York. Id. at 479.
CONCLUSION
The 2nd Circuit concluded that a two step process must be followed to determine whether a foreign judgment is repugnant to the public policy of New York and therefore unenforceable. The District Court must first determine whether appellant Viewfinder’s actions fall under the fair use exception to copyright law and are therefore protected under the exercise of free speech. The court must then determine whether French law provides similar protections. If it does not, only then may a judgment be considered repugnant to public policy.
The 2nd Circuit remanded the case for further proceedings but noted that the repugnancy argument rarely results in a lack of enforcement of a foreign judgment. Id. (“the ‘public policy inquiry rarely results in refusal to enforce a judgment unless it is inherently vicious, wicked, or immoral, and shocking to the prevailing moral sense’.”), quoting Sung Hwa Co. v. Rite Aid Corp., 7 N.Y.3d 78, 82 (N.Y. 2006).
The Court of Appeals rightly declares generally “under New York law [,] . . . foreign decrees and proceedings will be given respect . . . .,” Viewfinder, 489 F.3d at 479. A District Court in New York cannot find a foreign judgment repugnant to New York public policy if it does not first identify what New York public policy is and compare it to its foreign equivalent. The District Court cannot rely on U.S. Constitutional tradition, Viewfinder 406 F.Supp.2d at 282 (“among the basic human rights protected by the United States Constitution, the First Amendment occupies a special place”), to decline to enforce a foreign judgment. It must take the judgment through proper statutory analysis to determine whether it is repugnant to the public policy of New York.