Eps 94 - Calculating Damages for Copyright Infringement Transcript

Erin Austin: Today's exciting episode is something hot off the presses. If you can consider a U. S. Supreme Court decision about copyright infringement hot, but we're going with it. So recently, as I'm recording this in May, 2024, the U. S. Supreme Court settled a conflict among federal courts of appeal, that whether or not a copyright owner can recover damages for infringements that occurred more than three years before commencement of the lawsuit.

So the second circuit, uh, said that the copyright plaintiff would be limited to damages that are only three years. look back from the filing of the complaint. So they can't look at damages for infringements that occurred before three years back from the filing of the complaint, whereas the 9th and 11th circuits disagreed and said it wasn't limited to that three year look back.

And so in a 6 3 decision, Authored by Justin Kagan, the Supreme Court affirmed the 11th circuit's ruling and held that the Copyright Act entitles a copyright owner to recover money damages flowing from a timely infringement claim even if the infringement at issue occurred more than three years before the initiation of the suit.

There are of course some nuances to that. But generally, we want to look, it is a win because we don't want to have different results just because, you know, it is federal law. So it should apply equally all over the country. They don't want to have different results about what damages are available to us.

If you file on the 9th circuit or the 11th circuit versus filing the 2nd circuit. So that's great. So all that to say that, let's take this moment to review. Damages for copyright infringement. And so we're going to have a little refresher here. It may even be the deepest dive into damages that I've done.

I know I've done some light every view of the damages for copyright infringement. So let's go a little bit deeper today. So first, you know, what damages are available? Under the US copyright law, so it provides that the infringer of a copyright is liable for either the copyright owners actual damages, plus additional profits of the infringer, or they can get statutory damages.

It's actual damages or statutory damage. You cannot do both. So let's talk about actual damages and profits first. So as the name suggests, actual damages refers to the compensation awarded to a copyright owner based on the actual harm that the owner suffers from the infringement. So they can be calculated as the real financial loss.

So maybe lost profits from sales that didn't occur because of the infringement. Also, they have access to the profits made by the infringer. one might be more like maybe the infringer sold it for more than you could have sold it for, meaning you should have raised your prices.

 if your loss profits are higher, then go after that. If their profits are higher than you go after that. and then, so maybe it's a combination of the two, maybe, they, create a derivative that cause created, more profits. So you can get your loss sales and, profits from the derivative.

And so it's, you know, you can't double dip, but you can, aggregate your losses and the profits of the infringer. So the complication here is, on proving actual damages is that you do need to have to prove evidence of an actual loss. So you need to have be keeping, you know, sales records, financial statements, anything that would show that decrease in revenue that is attributable.

to the infringement. So, if your sale is just having to go down because, nobody wants it anymore, it's not attributable to the infringement, that would not be, an actual damage due to the infringement. So you do need to have, some records that So you can make that connection, which makes it a little more complex than statutory damages, which we'll talk about in a minute.

 for when we're looking at the infringer's profits, that's a little easier to prove. All you have to do is show the infringer's gross revenue. That's considered their profits. They can, say, well, I also have these expenses too. So this is my profit, but obviously that's a little bit easier to prove, they have clearly been selling it and have them and had some gross revenue based on the infringement.

All right. So that's your actual profits, and, actual damages and infringers profits that you can get as damages. Okay. The next category are statutory damages, and there are some eligibility requirements, which we'll talk about in a second. But if eligible, you can elect the copyright owner can elect to recover instead of actual damages and profits an award of statutory damages.

So these are the damages that the court can award for copyright infringement, which do not require the copyright owner to prove actual financial Loss, and this is really helpful if it is hard to prove your losses. Maybe you don't maybe you can't prove that direct relationship between the infringement and a decrease in sales, or maybe you haven't really had any sales yet.

And so, or there's, you know, not enough, uh, of, uh, uh, profits to, or damage to really make sense to pursue legal action. But, um, if you have access to statutory damages, that can be a make a big difference. So what are the eligibility requirements for statutory damages? It. requires timely registration of the work with the U.

S. Copyright Office. So to qualify for statutory damages, you must have registered the copyright either before the infringement began or within three months of first publishing the work. So publishing means when you made it available to the public. So when it's still like hanging out in your computer, Um, that's, that's not publishing.

That's creation, which is a different measure. Uh, for statutory damages, it's within three months of first publishing the work. So statutory damages can range, uh, from 750 to 30, 000. 1, 000 per work as determined by the court. We'll talk about what those variables are. And if there is a willful infringement, um, the statutories can be increased up to 150, 000 Per work, so obviously, um, you know, talking about the cost of litigation and whether or not it's worth it to pursue an infringement claim.

This can make a big difference, especially if you haven't really made any profits from your work yet. Or the profits have been relatively low. If you have access to statutory damages, one, you know, you don't have to prove your actual loss. And two, it makes it a much simpler case to prove. Therefore, you know, keeping, uh, attorneys fees, um, lower than if you have to prove all these, all the other stuff.

So will something, you know, uh, Will the court find that the infringement is willful? So it can, you know, if it, uh, can show that the infringer knew what they were doing was wrong, you know, this could be the case where, you know, you sent a cease and desist letter and instead of, you know, stopping the infringement, they just changed their URL or did something to try to hide.

And so they, you know, okay, I'll shut down that website and. Open up another one. Obviously, that is a very willful infringement versus someone who, um, you know, as soon as they get caught, they take it down, as you know, because I definitely preach this all the time and infringement is an infringement. It doesn't matter if you didn't realize you couldn't use it or, oh, I thought it was on the Internet.

So it was free or, oh, you know, um. Innocent or not, that will depend where in the spectrum of damages falls, but not whether or not it is an infringement. If you take somebody else's copyrighted work without permission and use it without their permission, it is infringement and the only issue is where in the scale of damages it falls.

So let's talk about calculating the damages, you know, how much in that spectrum. It's a pretty big spectrum where the damages fall. So it varies and it will depend on the seriousness of the infringing act and also depend on the financial worth of the infringer. So the court is going to determine this.

So, um. Innocent infringements again, you know, still infringement, but if it really, if the court binds and the infringer can prove that it really was innocent, I don't even know what this would be, honestly, um, that, uh, they can reduce it to as little as 200 per work. Um, so maybe an innocent infringement might be, I had a license.

You know, let's say, let's, let's use this one. Uh, like the stock photo place and you get a license for it and your license is to use it on your website. And, um, you know, so you have someone who does your email list or something. And, um, And they're like, oh, I like this image. And so, you know, yeah, you have a license for all the images on your website and they put it in your newsletter and your license doesn't include use in the newsletter.

You know, maybe that might be considered an innocent infringement. Again, I don't, I don't know what innocent means, but, um, I don't know how it becomes innocent. I mean. You know, we should know we should all know better that we can't use a works that we don't own without a license or permission. So, let's just use that 1 as a sample.

So, um, you thought you had a license for it. It was reasonable to believe that if you can put it on your website, you can put it in your newsletter, but you actually can't. So, let's, let's call that innocent infringement. And on the other hand, if, uh, it was something that was willful, like our example, you got that cease and desist, but instead you tried to, you know, uh, hide your use instead of, uh, stopping the use, uh, and the court can find as much as 150, 000, 150, 000, um, uh, penalty, uh, damages per work.

And that is, you know, To that, that really isn't a penalty, right? I mean, that is intended to punish the infringer, um, in that circumstance. Uh, and so again, you know, that spectrum will depend on the circumstances now for an actual calculation. I'm going to use the example of a website that has used 3 copyrighted photos.

All from the same photographer, maybe all from the same, um, you know, source. And so 3 photographs from the same source used on 1 website without permission. And so, if my range of, uh, statutory damages is 700, 7. 750 to 30, 000. Let's just use 10, 000 per photo. It's a lot, but let's just use it anyway. Um, so what would the damages be?

I've got one website from one source. three photographs. So damages are calculated per work, not per active infringement. There was only one active infringement. I took these photographs, I put them on my website, but it was three works, three separate copyrighted photographs. So the damages are per work. So at 10, 000 per Work that would be a 30, 000, uh, statutory damages claim for that.

Uh, so every song, every book, every photograph, um, that would be a separate work, anything that's a separate work is registered under the copyright. Uh, the copyright office is eligible for the separate statutory damage. Um, so. I don't know, it should be a good thing. I will look into this. Like, let's say, um, I take.

One. No, I know the answer to this. So if I take, um, one paragraph from a book, if I take three paragraphs from a book, that is still one work. That is not three works. All right. So, uh, sorry, I'm going to pause for one second here.

All right, so as you can see, that's a pretty heavy club to wield as a copyright owner if you have access to statutory damages. Now, it doesn't mean you're going to get 10, 000 for photo, you know, again, that's pretty high. Um, let's say though, somebody uses that photograph in advertising that they know, you know, you don't get to use.

Photographs for free and advertising. Um, that's going to be a bigger number than if you use it on your website that, you know, frankly, you know, nobody fits in. So, so it'll be in there, but that's that's the continuum of damages that are available, um, for, you know, um, minor, you know, Uh, minor infringements, I'll call it versus major or willful infringements.

So, you know, obviously, when you have statutory damages, it's in everybody's interest to just settle out of court. I mean, nobody wants to you're going to lose. I mean, if you infringed and it's eligible for statutory damages, why would you go? Um, why would you go to court? So, but, but you do want to have that leverage to, to keep it out of court.

So, you know, as I was writing this script, and it's hard to imagine I use a script because I always deviate from it, but I do start with a script. And I was thinking about the fact that this is what I hear a lot. Like, how do I, you know, get as much as possible from a script? On to one copyright registration because there are fees involved with registering copyrights.

They're not very high, frankly, but there is some work involved and some resources involved to register something in the copyright office. And the idea is to get, uh, is, you know, Uh, compilation or entire course or a series of, you know, um, on to one copyright registration. But what I was thinking is, you know, if your statutory damages are calculated per work, does it make sense just as a kind of prophylactic against copyright infringement to have each, like, let's say, module of a course registered as a separate work.

Um, you don't lose, you don't lose Protection that way, um, you have more works. So if I have, let's say I have a 10 module course and it is sold together, like you cannot buy the courses individually. You can only buy them together. So it would qualify as a single work for registration purposes. You don't have to register each of let's say there's 10 modules.

You can register them together because they're only available as one work. Um, uh, so that would be one work. Somebody steals one or more portions of my course. It's one work that's been infringed. And so that would be your statutory damages for one work versus if I have registered each module separately, even though you can only buy them together, but I've registered them separately.

And therefore each work is now each module is a separate work. That same infringement of my 10 course, 10 module course is now an infringement of 10 separate works. So I'm thinking about that one. So let me know if you want to hear more about that and I will dig into it anyway. So all that's to say that, uh, act statutory damage is wonderful.

If you can access them as far as being, you know, on the non copyright owner side. If you are the copyright infringer, that is why it is so, so important to make sure you have permission to use. Any work that's eligible for copyright protection, uh, if you don't own it, you need to have permission for it. Um, if you want to find out more about getting permission, I've got tons of resources about making sure you can get, um, copyright permission.

Um, you can, yeah, email me and I can send you a link to those resources. And, uh, and remember that, uh, you know, all these, of course, is, is, you know, Let me stop. I'm starting after, over again after I say that I'm gonna think about the issue with multiple modules. Okay, so I'm just starting the end again. So this is just to remind you, um, statutory damages can be very, very high, um, and even for innocent uses, you know, as a copyright owner.

Hey, great. You have access to these statutory damages. However, on the other side of that, if you are the infringer, even if you are an innocent infringer or an accidental infringer or an ignorant infringer, um, because you don't know better, although you should, if you're listening to this podcast, we want to make sure we're always getting permission to use Anything that you don't own, anything that falls within, you know, copyright protection, if you don't own it, make sure you have permission to use it.

I have created a number of resources to make sure that you understand what needs to be done to get permission. Um, and so the information is available to you. So, uh, don't forget IP is fuel. I'm tired.