Lucia Munguia Albarran (“Albarran”) and her husband, Antonio Barboza (“Barboza”) (collectively “Appellants”), were found liable after a jury trial in District Court for willful infringement of New Form, Inc.’s (“Appellee”) copyright for certain Spanish language films. The District Court instructed the jury that “willful infringement” required a showing by a preponderance of the evidence that Appellants “knew that they were infringing the [Appellee’s] copyrights or that they acted with reckless disregard as to whether they were doing so.” After judgment was entered, Appellants filed for bankruptcy and sought to discharge the judgment award. The Bankruptcy Judge held on summary judgment that the judgment
award was nondischargeable under 11 U.S.C. § 523(a)(6) as a “willful and malicious injury” based upon the jury’s finding of willful infringement and uncontroverted evidence of Appellants’ knowledge of Appellee’s copyright interest.
The BAP affirmed and held that a statutory award of damages for willful copyright infringement is a debt for a “categorically harmful activity,” which is nondischargeable under § 523(a)(6) “if the Bankruptcy Court determines that the infringer had the requisite subjective intent to injure another’s property interest.” The BAP held that the uncontroverted evidence of knowledge of the creditor’s copyright interest at the time of infringement was proof of their “substantial certainty” of resultant harm.
We now REVERSE and REMAND for further consideration because: (1) there is a genuine issue of material fact as to whether the infringement was a “willful” injury within the meaning of § 523(a)(6) of the Bankruptcy Code; and (2) the “malicious” requirement was not addressed separately from the “willfulness” requirement as required by our precedent.
