35 Damages

If the plaintiff prevails in their infringement case against the defendant, the last step in the process is for the court to assess what are called “damages.” Damages should not be confused with a penalty or a fine, as those are typically assessed in a criminal case. Rather, damages provide financial compensation (which is why they are often called “compensatory damages”) from the defendant to the plaintiff to “make the plaintiff whole” from any financial loss suffered as a result of the defendant’s actions. The goal of damages consists less in punishing the defendant as in allowing the plaintiff to regain what she has lost as a result of the infringement. (Under some state laws, but not in federal copyright law, a court may assess what are known as “punitive damages” that go beyond a plaintiff’s actual financial losses; punitive damages are typically awarded in those cases where a defendant acted willfully or maliciously.)

Statutory Damages.

The plaintiff in a copyright suit has a choice between collecting actual damages, the measured past and expected future profits lost due to defendant’s infringement, or statutory damages, a specific amount determined by the federal copyright statute. The plaintiff must elect which of the two types of damages will be assessed prior to the court’s determination of liability (“final judgement”). If the plaintiff elects to pursue actual damages, she will have to prove the amount of those damages by a preponderance of evidence. If the plaintiff is unsuccessful in his attempt to prove actual damages, the plaintiff can then seek statutory damages. However, once the plaintiff elects to pursue statutory damages, they are precluded from later attempting to prove actual damages.

The imposition of statutory damages, however, is not subject to any proof and therefore can be considered “punitive” in nature (rather than compensatory) in cases in which the plaintiff cannot prove any actual damages. The amount of statutory damages, as prescribed by Section 504 of the Copyright code, is determined as follows:

• No less than $750 and no more than $30,000 per work that has been infringed by the defendant(s), the exact amount to be determined “as the court considers just.”
• If there is more than one defendant, their liability is “joint and several,” meaning that they can each potentially be held responsible for paying the full amount of the damage award, unless they jointly agree on a method for splitting the payment, so long as the plaintiff is paid the full amount.
• If the plaintiff can prove that the defendant infringed plaintiff’s copyright willfully, then the maximum penalty is raised to $150,000 per work, at the discretion of the court.
• If the defendant can prove that he was unaware that he was infringing on plaintiff’s copyright, and had no reason to reasonably believe that he was, then the court can reduce the damages to not less than $200 per work.

Actual Damages

If the plaintiff elects to pursue actual damages against the defendant rather than statutory damages, the determination and proof of the amount of those damages can often be as complex as the process of proving liability. There are two components to a plaintiff’s actual damage award: (a) the reduction of the fair market value of the copyrighted work caused by defendant’s infringement, and (b) the amount of any profit realized by the defendant that was attributable to the infringement of plaintiff’s copyright.

Typically, a plaintiff will find it easier to prove the amount of profits the defendant made as a result of the infringement than to prove the reduction in the market value of the plaintiff’s work. If the plaintiff’s musical work was never released to the public, was not commercially successful before defendant’s infringing work, or was successful but only well before defendant released her work, it will be difficult to prove any loss in market value.  The defendant’s profits may be the only measurement of damages available. However, if the defendant’s work is released at a time when the plaintiff’s work is still commercially available with a significant fan base, it may be possible to prove that the defendant’s infringing musical work has diminished the market value of plaintiff’s work.

In any case, the defendant’s profits from his infringement will likely form the bulk, if not the entirety, of the plaintiff’s case for damages. If the defendant’s infringing work is not commercially successful, then it is likely the plaintiff would never have brought the suit to begin with, or would choose statutory damages and an injunction (explained below) in order to keep the defendant’s work off the market.

If the damages are based on the defendant’s profits, that amount would be calculated as the gross revenue less the defendant’s costs in producing the infringing work. Only the defendant’s net profits can be claimed as damages. The plaintiff will also have to prove a connection between the infringement and the defendant’s profits. In some cases, the jury will decide that only a portion of the defendant’s profits are due to the infringement, such as when only a distinct portion of the song can be attributed to infringement or when the infringing song is only one song on an album. For example, if the verse of the defendant’s song is clearly copied from plaintiff’s song, but the chorus is not, then the jury may proportionately reduce the amount of the defendant’s profits that will be awarded as damages to the plaintiff. On the other hand, if the defendant’s infringing song was the “lead single” from a successful album, then a greater share of the album’s profits than a simple ratio obtained by the number of songs on the album might be appropriate. Just as with the liability phase of the trial, expert witnesses may be required to explain either or both parties’ evidence regarding the calculation of damages to the jury.

If there are multiple defendants, each defendant is only severally (not jointly) liable for their own profits attributable to the infringement. However, each defendant is jointly and severally liable for any actual damages due to a loss of market value of plaintiff’s work.

Injunctions and other Equitable Relief

In addition to, or in lieu of, awarding damages to the plaintiff, a court also has the power to create other remedies, known as “equitable relief.” The most common form of equitable relief involves the issuance of an injunction. An injunction consists of a court order forcing or forbidding some action on the part of defendant. In music copyright infringement cases, the most common form of injunction a plaintiff may request of the court would be to force the defendant to recall and destroy all copies of the infringing song from the market. Alternatively, the plaintiff may be willing to allow defendant to continue selling their infringing song, but only on the condition that they give credit to the plaintiff as a songwriter and award some portion of the future royalties of those sales. In other words, the court may allow the defendant to purchase a license from the plaintiff to sell the song under certain conditions, but it would be up to the plaintiff to decide whether that was an acceptable arrangement. If the defendant’s song is likely to continue to have commercial success, then the plaintiff will probably want to be a part of that success rather than simply force the defendant to stop selling the song. 

Criminal Copyright Infringement

Section 506 of the Copyright Act provides that a person can be judged criminally liable for willful copyright infringement if the infringement was:

(A) for purposes of commercial advantage or private financial gain;

(B) by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; OR

(C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.

In criminal copyright cases such as this, the plaintiff (or “prosecutor” in this case) would be the federal government rather than an injured private person or entity, and the trial would use the rules and procedures for criminal prosecutions rather than civil cases. Those differences include the following:

• The standard of proof required of the prosecution would be the higher standard of “beyond a reasonable doubt” rather than the “preponderance of evidence”;
• The statute of limitations is five years (rather than three years for civil copyright claims); and
• The infringement is considered a federal felony and the penalties can include up to 10 years in federal prison and/or a fine of up to $1,000,000, depending upon the nature of the infringement and whether or not it is a first or subsequent offense.

Criminal copyright infringement prosecution is uncommon, but not unheard of. Whether or not to prosecute is up to the discretion of the U.S. Department of Justice (through the U.S. Attorney’s office), and the decision will often involve the seriousness of the offense and the probability of a successful prosecution. One trigger that will often lead to criminal copyright prosecution is when an infringer continues to engage in infringing activity after having already been judged liable of civil copyright infringement, which provides clear evidence of willful conduct.