In Part 1, we talked about what attorneys are thinking in a lawsuit and how non-statutory damages calculations play a part in that thinking. Now, let us turn to statutory damages.
Remember in part 1 that for the copyright infringement for the in-store display, the damages were so small that a lawsuit would be a losing proposition. In all likelihood, a request for removal might be the only recourse. Infringement doesn’t require intent, so even if the store stole it knowingly and with intent, it still may be difficult to get some kind of punitive damages as punishment. So in that scenario, a copyright infringer will likely get away with infringement. That just isn’t right. Congress sought to fix this eventuality when writing the Copyright Act. It is not hard to image a company that would calculate various factors, such as the odds of being caught, the likelihood of an author learning of the infringement, likelihood that the author would sue, the damages available to the author, and the potential settlement costs; then were those calculations to show that infringing rather than licensing the works is more profitable, become serial infringers.
To keep that inevitable result from occurring, the Copyright Act allows the copyright holder in an infringement suit to elect:
- non statutory damages, (the actual damages plus attributable profits), or
- statutory damages which allow for up to $30,000 per infringement.
For statutory damages, 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. 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 that is rare.
For our in-store display scenario, the infringer would be subject to a large enough award that a lawsuit would now become worthwhile for the copyright holder. Additionally, attorney fees are also available, paid by the defendant. That fact is a serious deterrent for infringers. Also, even though intent does not matter in copyright infringement; (not knowing about the infringement, or it being accidental is not a defense), the Copyright Act allows up to an additional $150,000 per infringing work for willful infringement. How willful the infringement is and therefore how much of that $150,000 is awarded is up to the court. So a willful infringement in our in-store display scenario could cost the store $100,000 or more.
There is only one caveat: An award for statutory damages is available for
- works in which the copyright registration is before the infringement, or
- for works registered after an infringement but the registration occurred within three months of publication (see here for information on what constitutes publication)
It is easy to see the advantages of registration. But let’s look at a real case from 2003 in which the plaintiff was awarded almost $20 million; Lowry’s Reports, Inc. v. Legg Mason Inc.
“An individual employed in Legg Mason’s research department contracted with Lowry’s to receive a single copy of its financial newsletter. Her contract prohibited copying or dissemination of the newsletter or its contents. Without authorization, that employee made numerous copies of various newsletters received which were faxed to Legg Mason brokers and branch offices, posted on the company intranet, and supplied to other members of the research department. Legg Mason brokers downloaded copies of the newsletter from Legg Mason’s website. After receipt of a cease and desist letter from Lowry’s, the employee continued to provide copies to other members of the research department.” – Internet Library
Here was the award breakdown:
- 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.
- The jury also found willful infringement and awarded an additional $100,000 per infringement for a total of $10.6 million.
- For the period June 20-July 26, 2002, the jury awarded statutory damages of $100,000 for each of 32 copyrights infringed for a total of $3.2 million.
This award was upheld on appeal. Scenarios like this one are not as rare as one might think. We just don’t hear about them because the fear of large statutory awards often leads to a settlement prior to any trial, or companies settle early to limit the bad press that might come with a drawn out court case. The advantages of statutory damages are clear. They not only generate greater awards, but require less attorney time to prove actual damages, and alleviate the need to have a concrete basis for attribution, since proof of that is not required. It makes a case financially feasible, where to wasn’t before. And most importantly, most attorneys will take a copyright infringement case on contingency if statutory damages and legal fees are available. All that needs to be done is register your artistic works.