Copyright infringement has always been a landmine in the online environment, and so have copyright infringement damages. It’s become more of an issue in recent years, as there are now more than one billion websites online – a huge percentage of which contain original content. Some analysts claim that hundreds of millions of pieces of new content (including written articles and videos) are posted to the Internet every minute.
There’s no practical way to adequately describe the feeling a copyright owner gets when they see their content copied and republished online. Most are tempted to yell, “I’m going to sue!” In some cases, they do. In others, the person or company will issue a DMCA takedown notice to the website with the offending content or the host of that site.
Given we are a DMCA agent service, we prefer to resolve disputes through the DMCA takedown process. Ah, but what exactly is at stake in copyright infringement cases if the parties cannot resolve the conflict? Let’s take a look at the potential damages a copyright owner can recover if you are found to be infringing on their content.
Types of Copyright Infringement Damages
Federal law establishes three different kinds of damages a judge or jury can award if a party is found liable for copyright infringement. Let’s say you’ve written an e-book about copyright infringement. You sell this book for $9.99, and probably, because there are billions of pieces of content created every day, you find there’s a market for your product, and you’re making some decent money.
One day, you discover that someone else (let’s call him Snidely Whiplash) has obtained your e-book, changed the author’s name to his own, and is selling it to his customers. This scenario is an obvious case of copyright infringement – and once your initial rage passes, you decide to sue Snidely. (For the time being, we’ll put aside the question of whether that’s a smart decision.)
Here is what you might be able to collect if you pursue the lawsuit to its conclusion without settling.
1. Actual Damages
The first section of the relevant law (17 U.S.C. §504(b)) makes it clear that an infringer can be liable for the actual damages suffered by the rightful owner: “The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement…”
That certainly sounds fair, but how do you measure “actual” damages? It’s not defined in the law as written, but case law has established some pretty reliable benchmarks.
First of all, the actual damages have to be computed based on measurable numbers, so you can’t just “guesstimate.” Your attorney will have to present hard numbers, as will the defendant in the case. Each side will probably see the others’ figures during the discovery process.
The numbers most judges will want to see document the sales you’ve lost because of the infringement – after all, that lost revenue is the real damage you’ve suffered. For example, you could show how much your sales declined after Snidely started selling his version of the e-book with expert testimony supporting your claim. If the judge accepts the numbers, that would be the basis for an actual damages award for copyright infringement.
Another course of action is to try to show the sales you’ve lost because of the infringement. If the judge or jury accepts the numbers, that would be the basis for an actual damages award for copyright infringement.
What if it’s impossible to quantify the lost revenue? What would happen if Snidely stole your e-book but used it in what’s legally known as a “different market.” For example, instead of selling it directly to customers (the same market) he might have instead included it in course material for a series of paid seminars he was giving (a different market). The infringer has still damaged you, but not necessarily via lost sales.
In that case, the judge will most likely determine the reasonable royalty that Snidely should have paid you for the use of your e-book. Ideally, he’ll base that on the amount that you’ve licensed similar products for in the past; otherwise, he may use comparable licensing fees that are common in the e-book industry or even what a fair royalty might theoretically be. As a last resort, the judge may award actual damages based on damage to reputation or goodwill.
The bad news is proving actual damages is an expensive process; so costly that it often ends up costing more than any number you could reasonably expect to recover. Given this, copyright owners usually look to one of the other categories of copyright infringement damages.
2. Profits
Here’s the second part of the relevant law we partially quoted in section one: “…and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.”
That means that Snidely isn’t only liable for your actual damages, he’s accountable for the additional profits he made from using your work – over and above the amount you lost in sales. Thankfully, profit awards are much more straightforward to compute than actual damages because the law spells it out pretty clearly: it’s the amount left over after Snidely’s net revenue from the e-book is subtracted from the actual damages awarded. That’s only fair; if Snidley still made a profit after paying you for lost sales, you should be entitled to that money as well.
There’s one possibility we haven’t considered. What if Snidely took the contents of your e-book and included it in a much larger law book that he’d written? In that case, the law does not entitle you to the profits he made from the rest of the book, so the judge will consider how much of Snidely’s book was your content, and decide what proportion of the profits you’re entitled to.
3. Statutory Damages
We mentioned a while ago that there’s one category of monetary damages that most content producers aren’t allowed to in copyright infringement cases, and that’s statutory damages (awards set by law).
The reason is that only plaintiffs who’ve formally registered their work with the Copyright Office (within three months of creation or at least one month of discovery of the infringement) are allowed to seek or receive statutory damages. Most producers (unless they’re large companies or have created major works like records or major publications) usually don’t file the necessary paperwork.
A judge doesn’t automatically award statutory damages in a copyright suit, even to those who have filed properly. The offended party has the option of choosing awards we’ve already discussed, or the statutory amounts allowed by law. But not both.
There are three types of statutory awards. Someone who infringed innocently may only have to pay a small amount of compensation. The claim falls into a second, more serious category, if the defendant can’t provide innocent infringement. And a case of deliberate violation is in the most-serious third category.
Time for the big question: how much? The answer once again is not cut-and-dried. The penalty for innocent infringement may be as low as two hundred dollars. In the second category, statutory damages can range from $750 to $30,000 for each work infringed upon (which means one award for the e-book that Snidely stole, not an award for each copy sold). And in cases of deliberate infringement, statutory awards can be $150,000 or even more.
The actual amount is determined by the court or jury depending on the claim, taking into consideration the seriousness of the infringement and the financial situation of the infringer. So while a best-selling author may get some measure of satisfaction by choosing between a $150,000 statutory award or the combination of actual damages and profits, chances are you’re not going to be receiving a big settlement check from Snidely Whiplash for stealing your e-book.
That brings us back to where we started – for many, it may not be worth pursuing a court case against a copyright infringer. The process is long and arduous, and throughout, the attorney’s clock will be ticking at rates of $300 per hour, $500 per hour or even more. Even if you don’t remember much of your high school math, you can see that issuing a DMCA takedown request for web content can be the better choice for the majority of producers.
How Is Copyright Infringement Decided?
Now that we’ve looked at what a court can award, let’s consider how a court decides whether a party has infringed on another’s copyright. Naturally, content theft would be easy to prove in a case like Snidely and the e-book because it was a direct copy of the original work. Most cases, however, aren’t so easy to prove.
There are three legal elements required to prove infringement: there must be a valid copyright on the work (whether it’s automatic or filed), it must be clear that the defendant copied the work, and the use must be what’s called “misappropriation,” or unauthorized use that results in harm to the owner.
Conditions one and three are relatively easy to prove if actual copyright infringement has occurred. But has the work actually been “copied?” If the defendant has altered it in some way, such as rearranging or rephrasing the sentences in a book or changing the lyrics or melody of a song, things get a bit thornier. And if it’s difficult to be sure that the defendant stole the allegedly infringing work, the battle can get downright contentious.
The principle that guides judges and juries in these cases is called “substantial similarity,” which is precisely what it sounds like. As you’d probably guess, though, similarity is often in the eye of the beholder, so judges rely on previous court rulings heavily for guidance.
Some of the criteria a court considers are the actual uniqueness of the allegedly copied section, whether the section is sufficiently complex that accidental reproduction would be unlikely, or if there’s an “idiosyncratic” element present in both works.
There are also the “stupid” mistakes that can give an infringer away, such as copying misspelled words from the original, or including “fictitious entries” (like a non-existent city placed on a map) that some content producers include for just this purpose. Clumsy attempts to hide the infringement, such as obvious rewording of sentences, can also lead to a finding of infringement.
Specific tests for infringement have complicated descriptions like “comprehensive non-literal similarity,” “fragmented limited similarity” and “abstract-filtration-comparison,” and they’re as complicated as they sound. If you become involved in a copyright lawsuit, you’ll probably learn all about them, but a full explanation is beyond the scope of this discussion.
There’s one other factor necessary for the determination of copyright infringement. The defendant must have had “access” to the original work. In other words, Snidely Whiplash could easily have downloaded your e-book, and a musician may have heard an original song on the radio before innocently or deliberately copying it. The law considers both “access.” On the other hand, it’s unlikely that an artist in San Francisco who’s never visited Miami has heard a copyrighted song that’s only been played in tiny Miami coffee houses a few times. In that case, access is probably not present.
The actual determination of whether a party has infringed copyright is often a difficult one and has led to many lengthy and complicated trials.
Famous Copyright Infringement Cases
The transcripts of infringement cases can be fascinating, and decisions are often not clear-cut. Here are a few examples of famous…or perhaps infamous cases.
A music publisher sued George Harrison in one of the best-known cases involving musical artists claiming that his hit song “My Sweet Lord” infringed on the copyright for the 1962 Chiffons hit “He’s So Fine.” The case dragged on for five years with the judge ultimately ruling that while the theft may not have been deliberate, access and substantial similarity proved infringement and a verdict of “subconscious plagiarism” was returned. Harrison had to pay a judgment of $587,000.
An Isley Brothers lawsuit against Michael Bolton for infringement was not as well know. The Isley Brothers accused Bolton of infringing on the Isleys’ “Love is a Wonderful Thing” in a somewhat similar song of the same name released 25 years later. Even though Bolton claimed he’d never heard the original, the jury returned a controversial verdict for the Isley Brothers: more than 5 million dollars in profit damages – the highest award ever in the music industry.
Another music-related copyright infringement case was very high-profile and ended up driving a company out of business. A&M Records (later joined by other labels) sued Napster for distributing the record label’s songs for free. Napster was required to publicly apologize and pay $26 million in actual damages and profits, with the size of the award forcing the online peer-to-peer service to shut down.
A 2009 case involving Gucci and Guess got particularly acrimonious, notably since Guess had been sued by other companies for copyright infringement many times in the past. In this battle, Gucci accused Guess of stealing many of Gucci’s copyrighted designs with Gucci seeking $221 million in copyright infringement damages. Gucci won the case but only received an award of $4.7 million, partly because the company had been so litigious in its own infringement claims and somewhat because it waited until Guess was already on the financial ropes before bringing the case.
Many other cases have resulted in large but undisclosed settlements. These cases include Associated Press suing the street artist who created the “Obama Hope” poster for infringing on an AP photograph. And one can never leave out Vanilla Ice settling with David Bowie and Queen for sampling the song “Under Pressure” in his hit, “Ice, Ice Baby.”
The morals of those stories: enormous verdicts or settlements are indeed possible, but they’re pretty rare and usually only succeed when the plaintiffs have deep enough pockets to pursue an expensive legal battle. For those operating online who do not have ten or twenty million dollars stuffed in the bedroom mattress, the DMCA provides an informal, efficient solution for dealing with copyright infringement situations.
Rick Chapo