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Introduction
| In this unit of the course, we will be covering
the legal remedies for copyright infringement. In other words, if a copyright
owner wins a copyright infringement suit, what does the copyright owner get from
the infringer? There are several potential remedies a copyright owner may be
entitled to. Some remedies are designed to prevent further infringement while
other remedies are designed to compensate the copyright owner for losses
incurred as a result of the infringement. Finally, there are criminal penalties
that may be applicable in addition to civil remedies in certain circumstances. |
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Injunction
Generally, the first thing a copyright owner
wants is to stop the infringing conduct. In order to accomplish this, courts
have the authority, under
section 502(a)
of the Copyright Act, to issue an
injunction - a court order telling the
defendant to stop the infringing conduct. An injunction can be temporary (before
the case has been decided) or final (after a verdict in the case has been
reached). Courts will sometimes issue
preliminary injunctions after a copyright
infringement complaint is filed. A hearing will be held where the court will
make an initial determination of whether it is likely that the copyright owner
will be successful and whether the copyright owner would be irreparably harmed
by continued infringement.
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Example: In the copyright
infringement suit brought by the Recording
Industry Association of America against the Napster file-sharing
service, the court issued a
preliminary injunction which ordered Napster
to take steps to remove access to files containing copyrighted sound
recordings owned by the RIAA member record companies. For a short while,
Napster made some attempt to do so using filtering software, but
ultimately decided it wasn't worth it and sold its assets off (without all
the copyrighted music and other content, file-sharing services such as
Napster would not be worth much).
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Impoundment & Destruction
In addition to an injunction, under
section 503 of
the Copyright Act, a court may also order the impoundment (collection and
storage) and destruction (or other disposition) of infringing articles. Under an
impoundment order, all infringing goods as well as equipment used to manufacture
such goods are collected and held until the court makes a final judgment on the
infringement claim.
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Example: In copyright
infringement claims against organized piracy operations, it is extremely
important not only to prevent the pirated goods (recordings, videotapes of
movies, etc.) from being distributed, but also to confiscate the equipment
(CD and tape duplicating equipment, CD burners, blank tapes and discs,
etc.) used to manufacture infringing goods.
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If a court finds a defendant guilty of
copyright infringement, it can order to destruction (or other disposition) of
infringing goods and equipment used to make them.
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Example: If a pirating
operation is found guilty of copyright infringement, a
court (in addition to other remedies) might order that the infringing
goods (pirated copies of movies, recordings, software, etc.) be destroyed.
Equipment used to manufacture infringing goods might also be destroyed
although courts also have discretion to order disposal of infringing
equipment other than by destruction (ordering
equipment to be turned over to the copyright owner). The photo shows CDs
seized during a raid on a pirate manufacturing plant in China being
destroyed. |
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Actual Damages & Profits
Many people who want to sue for copyright
infringement have overly optimistic expectations of the amount of money they can
recover. However, you cannot just pick an amount of money to sue for out of thin
air since the monetary damages you may sue for are specified by the Copyright
Act. The Copyright Act allows a plaintiff who wins a copyright infringement
action to recover several different types of monetary remedies. First, under
section 504(b) of the Copyright Act, a successful copyright plaintiff may recover "the
actual damages suffered by him or her as a result of the infringement, and any
profits of the infringer that are attributable to the infringement and are not
taken into account in computing the actual damages."
Actual damages are intended to compensate the copyright owner for the losses
incurred as a result of the infringement. Allowing the plaintiff to recover the
defendant’s profits, in addition to actual damages, is intended to prevent the
defendant from profiting from the infringement and to act as a deterrent to
infringement. Actual damages are the revenues lost by the copyright owner as a
result of the infringement. In order to be awarded actual damages, the copyright
owner must prove the amount of money it has lost because of the infringement.
Generally, actual damages will be equal to the fair market value of the use made
by the infringer.
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Example: If a
movie producer used a copyrighted song without permission in the
soundtrack to a motion picture, the copyright owner's actual damages would
be the amount that it would normally cost to obtain a license for this
type of use (the actual fee for such a license would be based on a number
of factors such as the popularity of the song, the prominence of the
song's use in the film, the budget for the film, etc.).
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Often, however, proving the amount of actual damages can be quite speculative
and sometimes impossible. Additionally, in many instances, actual damages and
profits may be a very small amount of money. Consequently, copyright owners in
some circumstances have
the option (instead of receiving actual damages and profits) to elect to receive
statutory damages.
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Jarvis v.
K2, Inc., 486 F.3d
526 (9th Cir. 2007) |
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Chase Jarvis took 3000+ photographs and
licensed them to
K2
Sports over 3 years. After the licenses
expired, Jarvis sued claiming K2 infringed by
continuing to use the photos. |
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The District Court awarded $40,107 in actual
damages for 58 photos infringed. The amount was
based on an estimate of the fair market value of
$461 for each online use (half print market
value). The court came up with this estimate based
on testimony from Jarvis's expert and a K2
executive, as well as the amount paid to Jarvis
for 3700 images under the expired license
agreement.
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Statutory Damages
The Copyright Act allows a copyright owner to
elect to receive monetary damages within a specified range (known as "statutory
damages") instead of actual damages and profits. Unlike actual damages and
profits, a copyright owner who chooses to receive statutory damages does not
have to prove the amount of its losses or the defendant’s profits from the
infringement. A copyright owner may elect to receive statutory damages at any
time before the court makes its final judgment of liability in the case.
However, in order to be eligible to elect statutory damages, the copyrighted
work must have been registered either before the infringement began or within
three months after the work’s initial publication (this is one of the main
reasons why prompt registration, although not required to own a copyright, is
still extremely important).
Under section
504(c)(1) of the Copyright Act, the general range of statutory
damages is from $750 to $30,000. However, the range can be increased in cases involving "willful infringement"
and decreased in cases involving "innocent infringement." In cases where a court
finds that the infringement was committed willfully (i.e., the defendant knew,
had reason to know, or recklessly disregarded the fact that its conduct
constituted infringement), a court can increase the award of statutory damages
up to $150,000. Alternatively, in cases where a court finds that the
infringement was committed innocently (i.e., the defendant was not aware and had
no reason to believe that its acts constituted infringement), the court may
reduce the award of statutory damages to $200.
Within the statutorily prescribed range, courts have discretion as to the
actual amount to be awarded. Most courts will try to approximate actual damages
and profits when possible and in cases where a plaintiff suffered little or no
actual damages and the defendant made little or no profits, courts will usually
award the minimum statutory amount.
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Paramount Pictures Corp. v. Davis
(2006) |
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Paramount Pictures, copyright owner of the
motion picture
Lemony Snicket's: A Series of Unfortunate
Events
sued an unidentified defendant
(later identified by a private investigator)
who obtained a digital copy of the film,
uploaded it to a file-sharing network, making
it available for downloading by millions of
people. The court awarded $50,000 in statutory
damages. In support of its decision to award
that amount, the court noted that the
defendant posted the film within a week of its
theatrical release causing Paramount to lose
significant profits, the defendant acted
willfully, and Paramount incurred significant
costs in locating & prosecuting the defendant,
and the award was intended to deter future
infringers. |
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Optional Reading:
Statutory Damages in Copyright Law & the MP3.com Case - a good article
explaining how statutory damages are determined and giving useful examples
including a potential $250 million award against a digital music company.
Costs & Attorney's Fees
Under
section 505 of the Copyright Act, a court may
award reasonable attorney’s fees to the prevailing party as well as the costs
incurred in connection with an infringement lawsuit. The right to recover
attorney’s fees can be very important since many copyright infringement suits
involve long, expensive trials and attorney's fees can easily be in the tens of
thousands of dollars or more. Costs which may be awarded include court filing
fees, expert witness fees, photocopying and transcription
costs for witness depositions.
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JWC
Investments, Inc. V. Novelty, Inc.,
482 F.3d 910 (7th Cir. 2007) |
| A court awarded
attorneys' fees of $575,099.82 to a law firm
representing a client in a copyright
infringement suit involving farting dolls. The
plaintiff owned a copyright in the
Pull My Finger Fred doll, described as a
white, middle-aged, overweight man with black
hair and a receding hairline, sitting in an
armchair wearing a white tank top and blue
pants who, when one squeezes his finger, farts
and makes crude/somewhat funny statements such
as "Did somebody step on a duck?" or "Silent
but deadly." The defendant made and sold a
doll called Fartman which looked very much
like Fred and performed a substantially
similar sounding bodily function.. |
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As a incentive to encourage copyright owners to
register their works, the Copyright Act requires that in order to be entitled to
attorney’s fees, the copyrighted work must have been registered before the
infringement began or within three months of the work’s publication (another
very important practical reason to register your copyrights) .
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It is important to note that the authority to award attorney’s fees is
discretionary and courts are therefore not required to do so. When deciding
whether or not to award attorney’s fees to the prevailing party, courts will
normally consider the losing party’s frivolousness, motivation, good or bad
faith, as well as general considerations of compensation and deterrence. Bad
faith generally occurs when a defendant willfully infringed the copyrighted
work, unnecessarily delayed the litigation or refused a reasonable settlement
offer. Similarly, a court may find that a plaintiff has acted in bad faith when
its infringement claim clearly lacked merit, when its real motive is to harass
the defendant, or when it has rejected a reasonable settlement offer.
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Criminal Penalties
| The vast majority of copyright infringements are
civil in nature and are not subject to any
criminal penalties. In the past,
criminal liability has usually applied to situations of large-scale piracy of
copyrighted works. More recently however, Congress has increased the scope of
criminal copyright liability in response to lobbying by the entertainment and
computer software industries. Congress realized that with the widespread
availability of copying technology and that technology’s ability to make perfect
reproductions, anyone can now commit large-scale copyright infringement.
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A. The 1976 Copyright Act
Due to estimates that record piracy cost the recording industry over $100
million annually, the 1976 Copyright Act made certain instances of infringement
of sound recordings subject to criminal penalties. If an infringement is made
willfully and for purposes of commercial advantage or private financial gain,
the infringer may be subject to criminal liability. For an infringement to be
considered willful, the government must prove that the defendant knew that its
acts constituted copyright infringement or, at least, knew that there was a high
probability that its acts constituted copyright infringement. In order to prove
that the defendant’s conduct was for purposes of commercial advantage or private
financial gain, the defendant does not have to actually make a profit, but only
hope or intend to make a profit.
Under section
506(a) of the Copyright Act, criminal copyright infringement of any
of the copyright owner’s exclusive rights is a
misdemeanor, punishable by
imprisonment for up to one year, a fine, or both. However, criminal infringement
of the reproduction or distribution rights may also be punishable as a
felony if
the defendant reproduced or distributed at least ten copies or phonorecords of
one or more copyrighted works with a retail value of more than $2,500 during any
180-day period. Felony copyright infringement is punishable by imprisonment for
up to five years (and up to ten years for subsequent offenses), a fine, or both.
In criminal cases, infringing articles as well as any equipment used in the
manufacture of infringing articles can be impounded and destroyed.
B. The No Electronic Theft Act
In 1997, the
No Electronic Theft ("NET") Act was signed into law.
The NET Act expanded the applicability of
criminal penalties for copyright infringement to situations where an infringer
acts without direct financial motivation.
The NET Act’s passage was in response to a legal loophole which was brought
to light in United
States v. LaMacchia In LaMacchia, David
LaMacchia operated a web site bulletin board which allowed subscribers to upload
and download copies of pirated computer software. LaMacchia not only encouraged
people to upload and download copyrighted software over his bulletin board, but
also warned his subscribers to act cautiously in order to avoid detection. Even
though the unauthorized distribution of software facilitated by LaMacchia
resulted in more than $1 million in lost revenue to copyright owners, the court
found that LaMacchia was not subject to criminal liability due to a loophole in
then existing copyright law.
Section 506(a) of the Copyright Act requires that
in order to be guilty of criminal copyright infringement, the infringing conduct
must be "for purposes of commercial advantage or private financial gain." Since
the government did not have any evidence that LaMacchia had received any
financial gain from his infringing conduct, he could not be convicted of
criminal copyright infringement although he would clearly have been liable for
civil copyright infringement if any of the software copyright owners sued him.
Despite its ruling, the LaMacchia court encouraged
Congress to reexamine the
state of criminal copyright law and suggested that criminal penalties should be
applicable to blatantly willful, large-scale infringements, even in the absence
of a financial incentive. Congress took the court’s advice and passed the NET
Act which expanded the Copyright Act’s definition of "financial gain" to include
the "receipt, or expectation of receipt, of anything of value, including the
receipt of other copyrighted works." It provides for criminal penalties for the
"reproduction or distribution, including by electronic means, during any 180-day
period, of one or more copies or phonorecords of one or more copyrighted works,
which have a total retail value of more than $1000." If an offense involves ten
or more copies of one or more copyrighted works which have a retail value of
$2500, the maximum penalty is three years in prison, a fine of $250,000, or
both.
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Example: In 1999,
Jeffrey Levy, a 22 year-old college student at the University of Oregon
became the first person convicted under the NET Act. Levy pled guilty to
criminal infringement of copyright in violation of the NET Act and the
Copyright Act. He admitted that he illegally posted thousands of MP3 files
of copyrighted musical recordings as well as computer software and
digitally recorded movies on his website, allowing the general public to
download and copy these copyrighted works. The University of Oregon
brought the matter to the attention of the Oregon State Police after it
noted a very large amount of bandwidth traffic being generated from Levy’s
web site on its server. Levy was fined $2500, the minimum amount under the
NET Act, and placed on two years probation. Optional: U.S. Justice
Dept. press release
and
article about the Levy prosecution.
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Optional Resources
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