Infringed copyright holders — big and small — can get relief
Although the Copyright Act and the Digital Millennium Copyright Act provide for statutory damages for copyright infringement, many copyright holders elect to pursue actual damages — commonly measured by lost profits. As this article explains, courts have applied several different approaches to compute such losses. For example, a plaintiff may allege that, if not for the infringement, its sales of the protected work would have grown in an amount equal to the infringer’s sales.
Hardly a day goes by when copyright infringement isn’t in the news. Earlier this year, for example, a couple of music industry heavyweights were charged with plagiarism. The family of Marvin Gaye took pop star Robin Thicke and his co-writers of the hit “Blurred Lines” to court for plagiarizing the late soul singer. And 2015 Grammy winner Sam Smith settled with musician Tom Petty after the latter accused Smith of borrowing from one of his songs.
Your clients may not be rock stars, but if their copyrighted assets are infringed, they’re entitled to seek damages from the infringer. A damages expert can help ensure they recover what’s appropriate.
What the law allows
If a copyright is infringed, the Copyright Act and the Digital Millennium Copyright Act (DMCA) provide for statutory damages that generally range from $750 to $30,000 per work under the Copyright Act and are $2,500 per violation under Section 1201 of the DMCA. If the infringement was committed willfully, courts in some cases may award up to $150,000 per violation.
Courts may also reduce a statutory damages award. If the infringer wasn’t aware — and had no reason to believe — that his or her acts constituted an infringement of copyright, some courts may reduce the award to a sum not less than $200.
Recovering lost profits
Many copyright holders elect to pursue actual damages against infringers, which are commonly measured by lost profits. Courts have applied several different approaches to compute such losses. For example, the plaintiff may allege that, if not for the infringement, its sales of the protected work would have grown in an amount equal to the infringer’s sales. However, the copyright holder must show that the infringer’s products are comparable to its own in terms of price, customers, distribution, packaging and advertising.
A plaintiff could also claim that it lost customers to the infringer and, if not for the infringer, those customers might have purchased from the plaintiff again. When this type of argument is made, courts consider comparability, especially in the customer base, as well as other factors affecting customers’ decisions.
Another approach involves sales records. If a plaintiff has records of its projected and actual sales from previous financial periods, it could establish a historical correlation between the figures that would support the use of sales projections to measure lost sales. Sales of different products also can reflect lost sales. The sales of these products during periods of both infringement and noninfringement could establish benchmarks for projecting the product mix relationships in the absence of the infringement.
Several other factors bear on actual damages. For example, after the amount of lost sales is determined, a deduction must be made for the costs and expenses that the copyright holder would have incurred to generate those sales. Conversely, the holder’s lost interest or earnings on the lost sales may be added to the amount.
In addition, the plaintiff may be able to recover the infringer’s profits that were attributable to the infringement and not already taken into account in the lost sales calculation. However, some of the infringer’s sales may be due to factors other than the infringed work, so it may be necessary to determine the portion of the product’s value that’s provided by the infringed work. Or, the infringed work may be closely intertwined with other product elements. Such calculations require detailed analysis performed by experienced damages experts.
Multiple approaches work
By offering multiple approaches that produce similar results, your clients can increase the likelihood of recovering appropriate damages in copyright infringement actions. Copyright holders aren’t limited to financial damages as a remedy, either. In some circumstances, they may want to seek equitable relief, including injunctions and impoundment of infringing items.