Copyright Infringement: How are Damages Determined?

Courts consider actual and statutory damages

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Money damages in copyright infringement actions are commonly awarded under three legal theories, actual damages, profits, and statutory damages:

Actual damages

 Also called compensatory damages, this consists of the dollar amount of any demonstrable loss the owner suffered as a result of the infringing activity. This loss may be from lost sales, lost licensing revenue, or any other provable financial loss directly attributable to the infringement.

Profits

This consists of any money made by the infringer as a result of the infringement. These damages are only awarded if they exceed the amount of profits lost by the copyright owner (actual damages) as a result of the infringement.

EXAMPLE: A book on self-defense, authored by Susan, contains a practical chapter on how to purchase and care for a handgun. Rachel also writes a book on self-defense and substantially borrows from Susan’s chapter on handguns without first obtaining her permission. Rachel has infringed Susan’s copyright. A court could award Susan actual damages if Susan proves that she lost sales of her book because people bought Rachel’s book instead, at least in part because of the handgun chapter. Alternatively, if Susan has licensed chapters of her books to other authors, the amount she typically receives for such licensing could be her actual damages. In addition, the court could award Susan any profits that Rachel realized from the infringement to the extent such profits exceeded the amount of Susan’s lost profits.

Statutory damages.

In many copyright cases, both actual damages and profits are difficult to prove. For that reason, the Copyright Act provides for statutory damages—that is, damages set by law. However, only a person who has registered a work with the U.S. Copyright Office before the infringement (or within three months of publication) may receive statutory damages. Such a plaintiff in an infringement action may opt for either actual damages (and the infringer’s profits, if appropriate) or statutory damages, but not both.

For infringements that can’t clearly be proven as either innocent or willful, statutory damages may be from $750 to $30,000 per infringement depending on the circumstances. The amount will depend on the seriousness of the infringing act and the financial worth of the infringer. On the other hand, an innocent infringer may have to pay as little as $200, while an intentional infringer may have to pay as much as $150,000 for a single infringement of one work.

Copyright Act: § 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. The court shall remit statutory damages in any case where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use under section 107, if the infringer was:

 (i) an employee or agent of a nonprofit educational institution, library, or archives acting within the scope of his or her employment who, or such institution, library, or archives itself, which infringed by reproducing the work in copies or phonorecords; or

 (ii) a public broadcasting entity which or a person who, as a regular part of the nonprofit activities of a public broadcasting entity (as defined in subsection (g) of section 118) infringed by performing a published nondramatic literary work or by reproducing a transmission program embodying a performance of such a work.

 (d) Additional Damages in Certain Cases.— In any case in which the court finds that a defendant proprietor of an establishment who claims as a defense that its activities were exempt under section 110 (5) did not have reasonable grounds to believe that its use of a copyrighted work was exempt under such section, the plaintiff shall be entitled to, in addition to any award of damages under this section, an additional award of two times the amount of the license fee that the proprietor of the establishment concerned should have paid the plaintiff for such use during the preceding period of up to 3 years.

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