Recourse for Rip-offs: Penalties for Copyright Infringement

Not all surprises are pleasant. There's nothing more disconcerting to an artist, writer or designer than seeing their hard work in a place they never expected to find it or intended to put it. And worse yet, someone else (whom they probably don't even know) may be making money off his or her efforts.

What can you get in a court of law if it happens to you?

Damages: Actual and Statutory

The remedy of choice for most aggrieved copyright holders is money. Courts can go about awarding monetary damages in two ways: actual or statutory.

Actual Damages

Actual damages are on losses actually incurred such as lost sales, lost value of the copyright and so forth. You must prove you incurred them. This can be messy, since if you knew what they were, they wouldn't be "lost."

Statutory Damages

Statutory damages need not be specifically proved. Section 504 of the 1976 Copyright Act provides:

[F]or all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which two or more infringers are liable jointly and severally, in a sum of not less than $500 or more than $20,000 as the court considers just.

Section 504(c) (1) of the Act provides that in cases of willful infringement the court may increase the damages award beyond the $20,000 limit, up to $100,000. Willfulness means the infringer has acted with "actual knowledge or reckless disregard for whether its conduct infringed upon the plaintiff's copyright."¹

It's interesting to take a look at how the courts apply this statute. In Universal Studios Inc., v. Ahmed ² the court had to decide the amount of statutory damages to award to Universal studios for unauthorized video tapes of the movie Jurassic Park II that the defendant was selling less than a week after the movie hit the theaters. The court had no problem finding the defendant's conduct willful based on the circumstances. But this didn't mean the court automatically awarded damages in excess of $20,000. Rather, the court said that "in the absence of an evidentiary hearing, a plaintiff must present sufficiently 'detailed affidavits' to permit the court to apply the appropriate factors in awarding damages" in excess of $20,000.

Universal Studios argued that it should receive $50,000 for each unauthorized tape. The studio's logic was "that the average price of a movie ticket is $7...[and] each [counterfeit] film could be viewed on a daily basis by 25 (or more) people times 365." The studio argued the resulting loss would be "$60,937.50 for each one copy of the film in a year."

The court decided this was a stretch, and interpreted the amount in the statute to apply to each work infringed, not each individual copy of the tape. It held that Universal could recover $50,000 jointly, from all of the co-defendants, and not a separate award from each infringing defendants. The court quoted Congressional hearings for the statute, in interpreting Congressional intent. "A single infringer of a single work is liable for a single amount... no matter how many acts of infringement are involved in the action, and regardless of whether the acts were separate, isolated, or occurred in a related series..." ³ Thus, it would appear to be the law of the land that, when it comes to copyright infringement, it's one damage award per customer, no matter how many copies or codefendants.

Injunctions

An injunction is a court order directing a party to stop doing something -- such as selling merchandise that infringes on a copyright. The copyright statute authorizes both temporary and permanent injunctions.⁴

To obtain a preliminary, or temporary injunction against an infringer pending the outcome of a trial, you're required to prove likelihood that you will ultimately be successful on the merits of your lawsuit for infringement. You must also show that you will irreparably harmed if the court does not order the infringers to stop what they're doing. As a practical matter, the courts will issue on order for a preliminary injunction if you can show you have met the basic evidentiary standards to show infringement (called a prima facie case).⁵ If you are successful at trial, the court will issue a permanent injunction if there is a threat of continued violations by the defendant.

As you might imagine, it is quite a legal and economic victory to obtain a temporary injunction. Sometimes that's all it takes to drive an evil infringer out of business.

Seizure of the Infringing Merchandise

Copyright law also allows you to go in and seize infringing merchandise, subject to a court order. The statute provides:

At any time while an action under this title is pending, the court may order the impounding, on such terms as it may deem reasonable, of all copies or phonorecords claimed to have been made or used in violation of the copyright owner's exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced.⁶

As the statute indicates, it's up to the court to specify what can be seized, who gets to grab it and what to do with it once it's confiscated.