Was Hummer Winblad Unjustly Enriched?
A friend of mine, Mark Radcliffe from Gray Cary, sent me a PDF of the Hummer complaint last night (Capital Records et al. vs. Hummer Winblad Venture Partners et al.). It essentially alleges no more than 1) Napster contributorily infringed the Plaintiffs' copyrights; 2) Hummer Winblad invested $13 million in Napster at a time when it needed the money; 3) Hummer Winblad and its partners Hank Barry and John Hummer controlled Napster through their equity ownership in Napster and their participation as board members and CEO; therefore 4) Hummer Winblad, Hank Barry and John Hummer contributorily infringed the Plaintiffs' copyrights. I am told by folks closer to the copyright laws than I that there are in fact cases that have found officers and directors directly liable for the copyright infringement of their companies. If that is in fact the case, it's bad law and at odds with the very principles of corporate law.
Interestingly, Judge Patel threw out similar claims against individual defendants in the initial Napster litigation; however, she threw out the allegations for failure to properly state a claim, so she never actually got to the merits of the claims. Regardless, it is clear to me that this case is not about actually recovering damages for copyright infringement. This case is about intimidation and the complaint reads like it to me.
Of particular amusement to me in the complaint were Claims 4 (Statutory and Common Law Unfair Competition) and 5 (Civil Conspiracy). In both claims, the Plaintiffs allege that
As a direct and proximate result of Defendants' act, Plaintiff have been damaged, and Defendants have been unjustly enriched, in an amount to be proven at trial for which damages and/or restitution or disgorgement is appropriate. (emphasis added)
I am not clear precisely how Hummer Winblad, Hank Barry and John Hummer were unjustly enriched. Was it the loss of $13 Million? Or was it the loss of much of their time for months on end? I'm sure that the folks at Hummer Winblad would be more than happy to disgorge the negative $13 Million. And I'm sure they'd be equally happy to get their time back. It would be true justice in this case if the judge awarded that relief, rather than the punitive cash damages the Plaintiffs are seeking.
I couldn't locate a copy of the complaint on the web. If you're interested in reading it, email me and I'll send you the PDF.
