Chapter 12Remedies

For Infringement

Two Types of RemediesCoercive Remedies: Designed to prevent further infringement.

Compensatory Remedies: Designed to compensate the copyright owner for financial losses caused by the infringement.

3 Coercive Remedies1. Injunction

2. Impoundment

3. Destruction

InjunctionAn injunction is a court order telling someone to do or to stop doing something.

May be temporary (pending resolution of the lawsuit) or permanent.

Contempt

A person who violates an injunction is subject to contempt of court, punishable by fine and imprisonment or both.

Injunction - ExampleRap artist Biz Markie sampled the song “Alone Again, Naturally” on an album released by Warner Bros. The court issued an injunction ordering Warner Bros. to stop selling the album containing the infringing song. Warner Bros. had to discontinue sales of the album and take back unsold copies from retailers and distributors.

Preliminary InjunctionA court issues a preliminary injunction BEFORE the case is heard.

The party that moves (asks the court) for the injunction is called the movant.

To obtain a preliminary injunction, the movant must show 3 things:

3 Requirements for Injunction1. The party will be harmed and money

damages will not be an adequate remedy.

2. The party is probably going to win the case (after the court hears the whole case).

3. The harm to the party asking for the injunction will be worse than the harm to the other party.

ImpoundmentA court may order an impoundment of infringing materials. A federal marshall will seize the materials and hold them in a secure location.

A party applies for an impoundment order by filing an affidavit identifying the infringing goods and their location, along with a bond.

ImpoundmentUnder an impoundment order, all infringing goods, as well as the equipment used to make the goods, will be collected and held until the court makes a final judgment on the infringement claim.

The defendant can ask the court to return the goods by filing an affidavit showing that they are not infringing.

DestructionIf the court finds the defendant liable for infringement, it can order that the infringing materials be destroyed. Federal marshals will destroy the infringing goods, along with the equipment, molds and masters used to make the goods.

3 Compensatory Remedies1. Actual Damages and Profits

2. Statutory Damages

3. Court Costs and Attorney’s Fees

Actual Damages and ProfitsActual Damages is the amount of money that the plaintiff lost as a result of the infringement.

Actual Damages = Fair Market Value of the Use

Fair Market Value could be a license fee, such as a mechanical license or a sync license.

Can only recover damages for the last 3 years because statute of limitations is 3 years.

Defendant’s ProfitsProfits refers to Defendant’s profits.Plaintiff can recover the amount of money that the Defendant made from infringing the copyright.During the discovery stage of the case, the Plaintiff can obtain copies of Defendant’s financial statements, to verify the amount of profit the Defendant made.

ProfitsCase: Defendant used Plaintiff’s songs in a musical review, performed at Defendant’s hotel. Court awarded Plaintiff a % of the profits the review made. Court also awarded Plaintiff a % of “indirect profits”: a portion of the hotel and casino revenues that may have resulted from having the review at the hotel.(Offering the show increased the number of people who came the hotel and casino.)

Statutory DamagesProblem: Plaintiff’s actual damages and Defendant’s profits may be difficult to prove. Or they may be a small amount of money.Example: If a song is used without a mechanical license and sells 100k copies, actual damages would be only $8500.

Statutory DamagesSolution: The Copyright Act allows the Plaintiff to choose between recovering actual damages and an amount of damages between $750 and $30,000. The actual amount is decided by the judge.

Willful InfrinfementWillful infringement is where the Defendant knew, should of known, or recklessly disregarded the fact that he was infringing the copyright.

If the judge finds that the infringement was done willfully, she can increase the award to a maximum of $150,000 for each copyright.

High Damage AwardsFacts that motivate a court to render high statutory damage awards:• A defendant continues the infringing conduct after

a copyright owner’s objection and request that the defendant obtain a license.

• A defendant continues selling allegedly infringing goods after being served with process in a copyright infringement suit.

• A defendant fails to cooperate with the plaintiff’s discovery efforts.

• A defendant is a repeat offender.

Registration RequiredTo recover statutory damages, the copyrighted work must have been registered, either before the infringement began or within 3 months after the work was published.

Award Covers All InfringementsAn award of statutory damages covers all infringements of a particular work.Example: Infringer sells 1000 copies of an album containing 1 unlicensed song. Infringer is liable for 1 award of statutory damages. If album contained 10 songs, liable for 10 separate damage awards, one for each work infringed.

Innocent InfringementInnocent infringement occurs where the Defendant is not aware and has no reason to believe that its acts are infringement.

Where the court finds innocent infringement, it can reduce the statutory damages to $200.

File Sharing & Statutory DamagesIn the RIAA’s cases against individuals for illegal file-sharing cases, there have been some high awards. Jammie Thomas was liable for $1.5 millionThe jury found that he willfully infringed copyrights, then lied about it and concealed evidence.

File Sharing & Statutory DamagesIn a file sharing case, the infringer downloads a music file to his computer, then he makes the file available to everyone on the network. It’s impossible to know how many other people obtained the file from the infringer, maybe one, maybe thousands of people. Cases where it is difficult to estimate actual damages are appropriate for statutory damages.

File Sharing & Statutory DamagesOne purpose of statutory damages is to deter future infringements (discourage people from infringing). If an infringer’s liability were limited to what they would have paid for the copyrighted work, for example 99¢, damages would not be an effective deterrent.

Costs and Attorney’s FeesIn the court’s discretion, the court may award the winning party costs and attorney’s fees.

To recover costs and attorney’s fees, however, the copyright must have been registered BEFORE the infringement began or WITHIN 3 MONTHS of the work’s publication.

CostsCosts that may be awarded include:- Court filing fees- Expert witness fees- Photocopying and postage- Transcription costs for witness depositions

Plaintiff’s Costs & Attorney’s FeesThe rationale for allowing plaintiffs to recover attorney’s fees and costs is:

- To deter potential infringers; and

- To encourage copyright owners to bring cases even when the damages award may not cover their litigation expenses.

Defendant’s Costs & Attorney’s FeesThe rationale for allowing defendants to recover attorney’s fees and costs is:

- To encourage them to defend against claims they believe to be invalid; and

- To discourage copyright owners from bringing frivolous lawsuits.

Plaintiffs and DefendantsCourts can award costs and attorney’s fees to the prevailing party in the case, whether it is the plaintiff or the defendant. Courts must treat plaintiffs and defendants the same way. This was the rule in Fogerty v. Fantasy, where the defendant won the case and was awarded over $1 million dollars in attorney’s fees.

Fogerty v. Fantasy(U.S. Supreme Court, 1994)

In the late ‘60s, John Fogerty was the leader and songwriter of the band Creedence Clearwater Revival. In 1970, he wrote the song “Run Through the Jungle.” The copyright to this song is owned by Fantasy Records. CCR disbanded in 1972.

Fogerty v. FantasyIn 1985, John Fogerty made a comeback with the song “The Old Man is Down the Road”.Fantasy Records sued him for copyright infringement, alleging that “The Old Man” song was simply “Run Through the Jungle” with new words. The claim was that John Fogerty had plagierized himself.

Fogerty v. FantasyJohn Fogerty won the lawsuit; the jury found that he had not copied his earlier song.Fogerty asked the court to award him attorney’s fees, but the court refused. He appealed this decision, but the appeals court affirmed the trial court’s denial of Fogerty’s attorney’s fees. Fogerty sought review by the Supreme Court. The SC awarded him his attorney’s fees, in the amount of $1,374,519.

Fogerty v. FantasyIn the Supreme Court’s decision, it emphasized that:- A court can award attorney’s fees, in the

court’s discretion, if the court finds that it is appropriate to do so.

- Courts must treat plaintiffs and defendants the same way. Defendants are entitled to receive fees just as plaintiffs are.

“Reasonable” Attorney’s FeesIn deciding the amount of attorney’s fees to award, courts consider: - The amount of work the attorney did- The amount of time the attorney worked- The customary fees for legal services- The amount of plaintiff’s damages- The results obtained in the case- The experience of the attorney

Enforcing Copyright JudgmentsWinning a case does not mean that you will be able to collect your damages award. If the defendant will not pay, but they own property, you can obtain a lien on their property. If they have a job, you can garnish their wages (have money taken out of their paycheck and paid to you).

Enforcing Copyright JudgmentsIf there the defendant infringed your song, you can have the court order the Harry Fox Agency and the PROs to pay the infringing song’s royalties to you. If your judgment is for more than the defendant’s assets, he may file for bankruptcy and your judgment will be treated as an unsecured debt which usually means you will collect only a small portion of it.

Criminal Copyright InfringementThe vast majority of copyright infringements are civil, they are not subject to criminal penalties.Criminal infringement test:- Infringer acts willfully and for purposes of

financial gain.

Criminal Copyright InfringementCriminal copyright infringement a misdemeanor and is is punishable by up to a year in jail, a fine of up to $100,000 or both.

If the infringer reproduced or distributed at least 10 copies with a retail value over $2500 during an 180-day period, it is a felony punishable by up to 5 yrs in prison or a fine of $250,000, or both.

Criminal Copyright InfringementIn criminal cases, the court will order the impoundment and destruction of all infringing goods, as well as the machines or equipment used to make the infringing goods.

Criminal Copyright ExampleJulius Chow Lieh Liu operated a business that made and sold thousands of copies of copyrighted music CDs, DVDs and computer software. After a 3-year FBI investigation, he was arrested. In 2010, he was convicted of criminal copyright infringement and sentenced to 4 years in prison.

The LaMacchia LoopholeSo criminal copyright infringement requires that the infringer has a financial motive for committing the infringement.What if someone infringes a copyright without a financial motivation? This was a legal loophole that was brought to light in the case U.S. v. David LaMacchia.

The LaMacchia LoopholeDavid LaMacchia was a 21-year old college student. He put up a website where people uploaded computer software programs and computer games (Microsoft Word, etc.) Anyone could visit the site and download the software for free. He derived no financial gain from operating the site.

The LaMacchia LoopholeLaMacchia was arrested and charged with criminal copyright infringement. However, the court held LaMacchia was not guilty because he did not intend to make money.As a result of this case, Congress enacted the No Electronic Theft Act (the NET Act).

The NET Act

One of the distinctive parts of the No Electronic Theft Act was that it applied criminal sanctions where the infringer acted without direct financial motivation.

Questions About Remedies

Statutory DamagesWhich of the following statements about statutory damages is accurate?a) If a plaintiff asks for statutory damages, he is not entitled to attorney’s fees and court costs.b) If a plaintiff asks for statutory damages he is not entitled to actual damages and profits.c) If a defendant asks for statutory damages, he can get them if he is proved innocent of infringement.d) If a defendant wins a frivolous claim by a plaintiff for infringement, it is entitled to statutory damages.

Attorney’s Fees and Court Costs

When a court awards a party (either plaintiff or defendant) attorney’s fees and court costs, the court costs include:a. Court filing fees.b. Expert witness fees.c. Photocopying costs.d. All of the above.

Damages

True or False?Due to the highly emotional nature of copyright infringement, in severe cases, a court will award damages to the plaintiff for emotional distress or mental anguish.

Contempt

True or False?A person who violates an injunction is subject to contempt of court, punishable by fine and imprisonment or both.