COPYRIGHT DAMAGES
I. Injunctions, Impoundment and Destruction
A. Enforcement of rights
1. The primary enforcement of rights of copyright
holders is through litigation.
There are no copyright police although the F.B.I. has gone after record,
tape
and software pirates, but that is fairly rare.
2. Enforcement remains one of the most difficult
issues for copyright owners. For
the entertainment industry it tends to be conducted by the trade associations
such as the RIAA and MPAA.
B. Injunctions
1. Section 502 provides that both temporary and
permanent injunctions may be
ordered by a court to prevent or restrain infringement of a copyright.
2. The injunction may be the sole remedy or it
may be accompanied by a damage
award.
3. Injunctions may not be awarded against the government.
C. Impoundment and destruction of infringing articles
1. At any time during the pendancy of an infringement
action, the court may order
impoundment of all copies claimed to have been made or used in violation
of the
copyright owner's exclusive rights. (Section 503)
2. Additionally, all plates, molds, matrices, masters,
tapes, film negatives, etc., from
which copies may be made may be impounded.
3. Then as a part of the final decree, the court
may order that articles so impounded
be destroyed or otherwise disposed of.
II. Damages § 504
A.
The owner whose copyright has been infringed has two choices of damages:
actual
damages and profits or statutory damages.
1. The copyright owner selects the type of damages
although some are limited to
situations where the owner had registered the work prior to the act of
infringement.
2. Actual damages and profits and statutory damages
are mutually exclusive; despite
some early decisions to the contrary, courts cannot order both actual damages
and
profits and statutory damages.
B. Actual damages and profits
1. A copyright owner may recover actual damages
suffered as a result of the infringement.
Damages are awarded to compensate the owner for losses incurred.
2. An owner also may recover profits of the infringer
that are attributable to the infringement.
This requires proof of the infringer's gross revenue.
a. The infringer then must prove any deductible
expenses and the elements of profits
attributable to factors other than infringement of the copyrighted work.
b. The owner may recover both actual damages and
profits; this is somewhat unusual.
The intent is to prevent the infringer from benefiting unfairly from his
or her wrongful
acts.
C. Statutory damages - § 504(c)
1. At any time before the final judgment is rendered,
a copyright owner may elect to take
statutory damages rather than actual damages and profits.
2. Statutory damages are available only if the § 412 requirements are met:
a. No statutory damages or attorneys’ fees are
available for any infringement of an
unpublished work commenced before the effective date of its registration.
b. Nor for infringement of copyright commenced
after first publication of the work and
before the effective date of its registration, unless such registration
is made within
three months after the first publication of the work.
3. If statutory damages are elected, the owner
is not required to present proof of damages
or profits. So, it is easy to see why copyright owners often prefer
statutory damages.
4. There is nothing to prevent a court from considering
evidence concerning actual damages
and profits in making an award of statutory damages within the statutory
range, however.
5. According to the statute, the sum shall not
be less than $750 nor more than $30,000 per work
infringed. About every 10 years the amount is increased (it started
with $250 and $10,000 in
1978, and has been upped twice). Where multiple works are involved,
the minimum and
maximum are to be multiplied by the number of works infringed.
6. Provisions also are made to increase the award
if the infringement was committed willfully.
Likewise, in the case of "innocent infringement" the award may be lowered
as follows:
a. $200 - $150,000 per work infringed.
b. The copyright owner has the burden of proving
willful infringement, and the court must
actually find willfulness in order to award the higher amount.
7. Statutory damages in copyright can be quite
high. A jury awarded Lowry’s Reports almost
$20 million for willful infringement of copyrighted stock market reports
on October 3, 2003.
See Lowry’s Reports Inc., v. Legg Mason Inc., 271 F. Supp.2d 737
(D. Md. 2003).
a. P, a small publisher with six employees, publishes
a daily and weekly financial
newsletter entitled Lowry’s New York “Stock Exchange Market Report to which
it sells
subscriptions. Subscribers may receive email copies two to three
hours after the stock
exchange closes each day.
1. The “crown jewels” of the Reports are the “Lowry’s
numbers” which are figures
representing “ buying power,” “selling pressure” and “short term buying
power.”
Numbers vary daily and are calculated using a confidential algorithm.
2. Lowry’s sells only to individuals and has no
group subscription rate. Every
subscriber has to execute a subscription agreement that prohibits unauthorized
copying and dissemination of the reports or the Lowry’s numbers.
b. D, a large corporation that earned $66 million
in the third quarter of 2003, subscribed
to one copy at $700 for 10 years and , without a license, distributed copies
in paper
and via email to its research department. Later in 1999 it began
to post reports on the
corporate intranet.
1. When P learned of the infringement, it sent
a cease and desist letter which was
ignored by the company.
2. After learning that the posting on the intranet
had not stopped, P set a memo to
all Legg Mason employees reminding them that they were not permitted to
reproduce any portion of the Reports by any means. Still the infringement
continued.
c. D claimed fair use for the emailing of copies
of the entire newsletter. The court did not
find fair use but did not award damages for this either.
d. The jury awarded $250,000 for lost revenue,
$50,000 for each of the 102 registered
copyrighted works infringed from July 1999 through July 2001 for a total
of $5.1 million.
1. The jury also found willful infringement and
awarded an additional $100,000 per
infringement for a total of $10.6 million.
2. For the period June 20-July 26, 2002, the jury
found no fair use and awarded
statutory damages of $100,000 for each of 32 copyrights infringed for a
total of
$3.2 million.
3. It did not award D’s profits but did say that
some portion of the profits were
attributable to the infringement but P did not establish this.
e. D petitioned for a new trial, but the court
upheld the damage award. It denied P’s
request for attorneys’ fees and costs of about $1.6 million holding that
D had already
been sufficiently deterred by the amount of the jury damage award.
8. Innocent infringement -- If an infringer can
prove to the court that he or she was not aware and
had no reason to believe that the acts constituted infringement, the statutory
damages may be
reduced to $200.
a. This provision is designed to protect against
unwarranted liability in cases of occasional
or isolated innocent infringement.
b. The burden of proof rests on the infringer,
and the court must make a finding of innocence
in order to award a reduced amount of statutory damages.
c. If the work infringed carries a notice of copyright,
then the D cannot claim to be an innocent
infringer. (Section 402(d)) So, a copyright notice cuts off
all claims of innocent infringement.
D. Remission of damages
1. In order to protect educational and scholarly
users of copyrighted material from liability for
innocent infringement, § 504(c)(2) states that the court shall remit
damages if the infringer had
reason to believe his or her use was a § 107 fair use.
2. This is provided for teachers, librarians, archivists,
public broadcasters and the nonprofit
institutions with which they are associated. According to the
House Report accompanying the
Act, in cases under this provision, the burden of providing the D's lack
of good faith rests on the P.
III. Other Damages
A. Attorneys' fees
1. Section 505 provides that the court may award
to “the prevailing party” a reasonable attorneys'
fee as part of the costs, but such an award is not available against the
United States or any
officer thereof.
2. The rationale for an award of attorneys’ fees
is that it helps ensure that all litigants have equal
access to the courts to vindicate their statutory rights.
a. It prevents copyright infringements from going
unchallenged where the commercial value
of the infringed work is small and there is no economic incentive to challenge
an
infringement through expensive litigation.
b. Finally, an award of attorneys' fees serves
to penalize the losing party as well as to
compensate the prevailing party.
3. Remember, a P is entitled to attorneys' fees
only if the work infringed is registered at the time
infringement occurs.
4. Fogerty v. Fantasy, 510 U.S. 517 (1994)
answered a very important question: does the statute,
despite its language make an award of attorneys’ fees to a prevailing P
as a matter of course,
but for a D to recover such fees is D required to demonstrate much more
such as bad faith,
harassing litigation, etc.
a. The Court held that attorneys’ fees are is discretionary
with the court but prevailing Ps and
prevailing Ds are to be treated the same.
b. Post-Fogerty cases of awards to prevailing
Ds still tend to focus on P’s bad faith motivation
or objective unreasonableness despite Fogerty.
5. Another issue is how are attorneys’ fees to be calculated.
a. First, note that the statute authorizes only a reasonable award of attorney’s fees.
b. The 2d Circuit has concluded that for prevailing
parties with private counsel, the actual
billing arrangement is a significant but not necessarily controlling factor
in determining
what fee is reasonable.
6. Ordinarily, it is for the trial court to award
the attorneys' fees, and an appellate court will not
overturn a trial court decision on this matter, except on grounds of abuse
of discretion.
B. Costs
1. Awarding costs also rests in the court’s discretion,
but costs cannot be awarded against the
United States or any officer thereof.
2. Strangely enough, costs may be awarded to the
losing, rather than the prevailing party. Such
costs do not include attorney’s fees, however.
3. As with attorney’s fees, an award of costs will
not be made if there no element of moral blame
attributable to the party against whom such costs are sought.
C. Prejudgment interest may also be awarded.
IV. Section 1201 (anti-circumvention) Damages
A.
There are separate damages provisions for anti-circumvention and
they include both civil and
criminal penalties for violations of §§ 1201
and 1202.
B.
Under § 1203. courts have broad powers to grant injunctions,
and award damages, costs and
attorneys' fees.
1. There are both actual damages and profits available to "a person injured by a violation."
2. Statutory damages range from $200 - $2500 per act
of circumvention, device, product,
component, offer or performance of a service.
3. The court may also order the impounding, the
remedial modification or the destruction of
the devices or products involved in the violation.
4. The court may punish repeat offenders by awarding
treble damages and may reduce the
damage awards against innocent violators.
5. In the case of nonprofit libraries, archives,
educational institutions or public broadcasting
entity, the court must remit damages if it finds that a qualifying entity
had no reason to
know of the violation.
C. Criminal penalties
1. Any person who violates §§ 1201 -
1202 willfully and for purposes of commercial advantage or
private financial gain is subject to the criminal penalties.
2. These include:
a. A fine of not more than $500,000 or imprisoned for
not more than five years, or both, for
the first offense.
b. Repeated offenses subject the offender to a fine of
not more than $1 million or imprisoned
for not more than 10 years or both.
3. No criminal provisions may be brought against
a nonprofit library, archives, educational
institution or public broadcasting entity.