Imagine that you are an illustrator, and you make your living by selling and reprinting your artwork. One day, you discover that someone has stolen one of your original paintings, and reproduced it on T-shirts and posters that are being sold online. Of course, this is upsetting emotionally; your hard work was taken from you without attribution. But it is also upsetting financially, leading you to sue. If you prevail on a lawsuit for copyright infringement, you may be entitled to money damages.
Money damages in copyright infringement actions are commonly awarded under three legal theories:
Also known as compensatory damages, "actual damages" 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.
Federal law (17 U.S.C. § 504(b)) provides: "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."
In the example above, your actual damages would be your lost revenue as a result of the infringer taking your painting and reproducing it on T-shirts. These calculations are imperfect; you could argue that your sales went down by a certain percentage of time during the period that the infringer was selling the T-shirts, though the causation is not always clear.
Usually, plaintiffs in infringement actions would offer expert testimony to establish their actual financial damages to the court.
This second form of damages consists of any money made by the infringer as a result of the infringement. These damages are awarded only if they exceed the amount of profits lost by the copyright owner (actual damages) as a result of the infringement.
For example, let's say that 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.
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.
17 U.S.C. § 504(c) specifically allows for statutory damages set by the Act. For infringements that cannot 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.