One of the greatest advantages of registering a copyright pertains to the ability to recover statutory damages and attorney’s fees in a successful action. Given that many infringements costs many thousands of dollars to prove in court yet only generate provable damages of minor amount, the inability to collect significant damages and incurred attorney’s fees for infringement of a non registered copyright may make the difference between a successful action or a pyrrhic victory.
This article shall describe the basic law on damages that are available in a copyright action and how a person can maximize the chances for successful recovery by the simple expedient of registering a copyright.
Basic Law on Damages in Copyright
As seen in our article on copyright, owning a copyright is a property right that can be protected by commencing litigation against a party who infringes on one’s copyright. A successful plaintiff in a copyright infringement case is entitled to elect between actual damages (profits lost,) on the one hand, and statutory damages, on the other. This election is to be made at any time before judgment is rendered.
Actual damages include any damages of lost profits that proximately result from the infringement that a party is able to prove by a preponderance of the evidence. At times it may be difficult to prove that the plaintiff has lost any money as a result of the infringement since the business may just be commencing or the profitability questionable. Note that in such case, the plaintiff is entitled to the defendant’s profits. However, often the defendants have few profits since the infringement has only just begun.
Importantly, in order to succeed, all the plaintiff need do is introduce evidence of the gross profits of the defendant from use of the copyright; the burden then shifts to the defendant to introduce evidence showing its net profits are less. These damages are decided by a jury.
The judge decides on statutory damages. Statutory damages include “a sum of not less than $750 or more than $30,000 as the court considers just.” The judge awards these for each work that was infringed upon. Further, a plaintiff who can demonstrate that infringement was “willful” can recover up to $150,000 in statutory damages; an infringer that demonstrates he or she “was not aware and had no reason to believe that his or her acts constituted an infringement” can have the damages reduced to $200. “Willful,” under the statute, means “with knowledge that the defendant's conduct constitutes copyright infringement.” Danjaq LLC v. Sony Corp., 263 F.3d 942, 957 (9th Cir.2001)
Statutory damages are, therefore, somewhere between $200 and $150,000.
Most importantly, with statutory damages, the court can also award reasonable attorney’s fees to the prevailing party. That is not true with actual damages. Without award of attorney’s fees, the value of the final judgment is often reduced. To win one hundred thousand dollars which costs you fifty thousand dollars in fees cuts your recovery in half.
The district court has broad discretion in determining the amount of statutory damages in a copyright infringement case. Venegas-Hernández v. Sonolux Records, 370 F.3d 183 (1st Cir.2004); Video Views, Inc.v. Studio 21, Ltd., 925 F.2d 1010 (7th Cir.1991). However, the amount of statutory damages should be sufficiently high to deter future infringement. Int'l Korwin Corp. v. Kowalczyk, 665 F.Supp. 652 (N.D.Ill.1987). Moreover, although the plaintiff requesting statutory damages does not have to prove its own actual damages or the amount the infringer profited from his conduct, courts have considered these amounts when awarding statutory damages in a case. See, e.g., Webloyalty.com v. Consumer Innovations, LLC, 388 F.Supp.2d 435 (D.Del.2005).
- Limitation: Failure to Register and Effect of Berne Convention
The Berne Convention provides that a party would not have to register the work in order to file a copyright infringement action. This convention, which has been adopted by the United States, is the current law.
However, in ratifying the convention, Congress amended Section 411 of the Copyright Act to omit the requirement of registering to bring an action but Congress considered, and did not amend, Section 412, which deals with statutory damages and attorney’s fees. These are not awardable if the infringement took place before registration, even under the Berne Convention. See Rudnicki v. WPNA 1490 AM, 580 F.Supp.2d 690 (N.D.Ill., 2008) and Elsevier B.V. v. UnitedHealth Group, Inc., Slip Copy, 2010 WL 150167, 93 U.S.P.Q.2d 1408 (S.D.N.Y., 2010) In this case, the client registered the work only after learning of the infringement.
Text of Statutes
§ 504. Remedies for infringement: Damages and profits
(a) In General.--Except as otherwise provided by this title, an infringer of copyright is liable for either--
(1) the copyright owner's actual damages and any additional profits of the infringer, as provided by subsection (b); or
(2) statutory damages, as provided by subsection (c).
(b) Actual Damages and Profits.--The copyright owner is entitled to 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. 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.
(c) Statutory Damages.--
(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.
(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200. . . .
§ 505. Remedies for infringement: Costs and attorney's fees
In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney's fee to the prevailing party as part of the costs.
§ 412. Registration as prerequisite to certain remedies for infringement
In any action under this title, other than an action brought for a violation of the rights of the author under section 106A(a), an action for infringement of the copyright of a work that has been preregistered under section 408(f) before the commencement of the infringement and that has an effective date of registration not later than the earlier of 3 months after the first publication of the work or 1 month after the copyright owner has learned of the infringement, or an action instituted under section 411(c), no award of statutory damages or of attorney's fees, as provided by sections 504 and 505, shall be made for--
(1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or
(2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.
Quite often an infringement occurs before a company is up and running and profitable and the damages that can be proven may be minimal. That is one of the reasons that statutory damages are provided if the infringement occurs after registration. When combined with the award of attorney’s fees for statutory damages and the relative ease and small expense of registration, it is clear that all copyrights should be registered.
Realistically, few startups take the time to learn the law and plan for infringement and there is a thriving industry of the unscrupulous who freely steal unregistered materials, knowing that startups, usually with little money, cannot afford the litigation and have little cost benefit advantage given the likely attorneys fees. Nevertheless, it still may be worthwhile for the wronged party to commence litigation, since without it the concept is forever in the public realm.
Registration is almost always a good idea and is highly recommended.