This is the first question people ask when deciding on whether to enter into a copyright lawsuit. It is the same question for both the plaintiff and the defendant, each weighing the potential award against the potential costs and the time and effort required to get to that point. Each side looks at the initial evidence and makes assumptions on their chances of winning. Plaintiffs formulate a minimum settlement number that the would take at that stage of the litigation, as well as what price they believe would satisfy the opposition given the evidence. This number is constantly changing; each stage of the litigation provides new evidence which shifts the assumptions. Plaintiff’s may also have objectives beyond money, such as removal of the offending products from circulation. That question often depends on how the work is being infringed, its public exposure and to what extent the original work may be devalued. For the defendant, removing the offending work may be such a burden that they may wish to quickly offer a settlement,one with a high enough number that it will be accepted yet with a stipulation that the leftover inventory may be sold. Additionally, Defendants are often worried about bad press or harm to the company’s public image.
Given the unlimited factual variations, it is impossible to provide any monetary number without the specific facts of a case. However, the Copyright Act has within its text, rules by which all damages are awarded, and understanding these can help guide a decision to litigate an infringement.
There are two types of damages available in a copyright infringement action;
- statutory and
Statutory damages are only available to copyright holders with a valid copyright registration prior to the infringement or within 3 months of publication. Non-Statutory damages also require a copyright registration but can be after the infringement is discovered. I want to make sure that everyone understands the difference between a copyright and a copyright registration. While every author holds a valid copyright in their work as soon as it is created, a copyright registration requires that the author register and submit the work to the Copyright Office. Adding a © to a work is not sufficient and not required for a valid copyright.
So, what is the difference between statutory and non-statutory damages and why why might statutory damages be so much more lucrative.
To answer that, we must first look at what occurs when only non-statutory damages are available. Non-statutory damages allow the a plaintiff prevailing on an action to receive:
actual damages plus a percentage of the profits that are attributed to the infringement.
What is meant by actual damages and attributed profits? Actual damages represent the money that would have been received if the author had created the work and sold or licensed it to the infringer. So if a boutique wants to use a photographer’s image on an in store display, only up for a month. the actual damages are the cost of the photo shoot, say $500, plus the licensing fee the photographer would have charged for that use, say $1000. Attributed profits is a harder concept to determine. When someone buys a product, for example, a book, the purchase decision looks at various factors about the products; who the author is, the genre, the price, the quality such as hardcover, versus its paperback version, etc. If an infringing image is on the front cover, how much of the purchase of the book can be attributed to the cover. If the image were different, for someone that chose to buy the book, how much of the decision was made by the cover. If it were a Stephen King book, not much probably, but an unknown author, maybe a lot. With that in mind, let’s make some calculations.
In our store display scenario, the copyright holder is entitled to the $500 for the shoot and the $1000 for the licensing. Calculating how much the in-store display had on sales is very hard to quantify and would probably amount to very little, since we have to have a fairly solid reason for determining our attribution percentage. if it were .10% and store sales that month were $10,000, then the calculation for attribution is .10 x $10,000 = $1000. Add the Actual $1500 for a total of $2500. That’s probably not worth suing for. Now, let take our book, with an unknown author; same picture. Quality, book size, and genre probably don’t matter too much, because the store is filled with books of the same size, quality and genre. So why pick this one? Maybe the description, even its placement in the store, but it is the cover photo which helps to give a sense of the content, and usually plays a large role in purchasing. If the book costs $10.00 and half of the purchase is due to the picture, and 5000 are sold, then in addition to actual damages, the copyright holder is entitled to $10 x 5000 x .5 = $25000. Add the $500 for a Grand total of $25,500. That might be enough to warrant a lawsuit, but don’t forget, the attorney have to be paid. Unfortunately, in the first scenario, there aren’t many actions available to the copyright holder.
In part 2, we’ll look at what happens if statutory damages are available and I am pretty sure, there won’t be any disagreement on which is better.
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