We discussed damages available under the Lanham Act for trademark infringement in a previous article, but now we turn to another medium through which creatives and artists routinely protect their work: copyright.
United States copyright legislation was first enacted in 1790 in the First Congress—protecting works such as books, maps, and charts for a period of only 14 years. United States copyright legislation and policy has undergone extensive redrafting since that time, and the Copyright Act of 1976 now provides the modern framework for copyright protection and enforcement. As with the Lanham Act, the Copyright Act also gives courts considerable discretion to determine an appropriate dollar amount to compensate a plaintiff for copyright infringement—particularly in lawsuits where the plaintiff seeks “statutory damages.” In general, an infringer of copyright is liable for either (1) the copyright owner’s actual damages and any additional profits of the infringer, or (2) statutory damages (as explained in further detail below). 17 U.S.C § 504(a). Here’s how copyright infringement damages are assessed:
Actual Damages
A prevailing plaintiff in a copyright infringement suit may recover its actual damages caused by the infringement and the defendant’s profits attributable to the infringement. 17 U.S.C § 504. Actual damages are measured by calculating the losses suffered by the copyright owner as a direct result of the defendant’s infringing activity—these calculations usually take into consideration lost sales and profits, lost business opportunities, and any other demonstrable financial loss stemming from the infringement. Actual damages can be difficult to prove, as the plaintiff will need to draw a clear nexus between losses suffered by the plaintiff and the defendant’s infringement. In recovering the defendant’s profits, however, a plaintiff need only present proof of the defendant’s gross revenue. The burden then shifts to the defendant, who must prove the defendant’s “deductible expenses and the elements of profit attributable to factors other than the copyrighted work.” Plaintiffs will then argue that any of the defendant’s claimed “deductible expenses” were actually incurred in furtherance of the infringing conduct, and the parties argue back-and-forth until the court decides a just and equitable dollar figure to award the prevailing plaintiff.
Statutory Damages
A more efficient and profitable means of recovery for copyright infringement is statutory damages—meaning damages that are determined by statute. Pursuant to the statutory damages provision of the Copyright Act, 17 U.S.C. § 504(c), a “copyright owner may elect, at any time before final judgment is rendered, to recover . . . 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 . . . in a sum of not less than $750 or more than $30,000 as the court considers just.” 17 U.S.C. § 504(c)(1). If the court finds, however, that the 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.” 17 U.S.C. § 504(c)(2). Statutory damages are therefore decided at the court’s discretion, and the facts of the case (e.g., whether the infringement was committed willfully or with intent to damage the plaintiff) will determine where this discretion will land on awarded dollar amount. It is important to remember also that statutory damages are not intended merely for the restitution of profits or reparation of injury, but to deter future wrongful conduct.
The Fifth Circuit has recognized that district courts have wide latitude in deciding whether to require an evidentiary hearing before entering default judgment. James v. Frame, 6 F.3d 307 (5th Cir. 1993). Where “the amount claimed is a liquidated sum or one capable of mathematical calculation[,]” an evidentiary hearing is not required. James, 6 F.3d at 310. Thus, at least for courts located in the Fifth Circuit, a hearing on damages may not always be required in clear-cut cases—particularly in cases where statutory damages are appropriate under 17 U.S.C. § 504(c).
Recovery of Costs and Attorney’s Fees
The Copyright Act also provides for the recovery of costs and attorneys’ fees:
In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.
17 U.S.C. § 505. The Fifth Circuit recognizes that “[A]ttorney’s fees to the prevailing party in a copyright action is the rule rather than the exception and should be awarded routinely.” Bell v. Eagle Mountain Saginaw Independent School District, 27 F.4th 313, 326 (5th Cir. 2022).
A Caveat
An award of statutory damages and attorney’s fees under the Copyright Act is not absolute, as statutory damages and attorney’s fees will not be available for: (1) any infringement in an unpublished work commenced before the work’s registration date; or (2) any infringement commenced after first publication of the work and before the work’s registration date (unless registration is made within three months after the first publication of the work).[1] Thus, it is vitally important to apply for copyright registration the moment a work comes into being, or else the work’s creator may miss out on the substantial benefits conferred by the Copyright Act. Further, although the Copyright Act imposes a three-year statute of limitations period on plaintiffs to bring a copyright infringement cause of action (17 U.S.C. § 507(b)), copyright law considers a subsequent infringement of the same work to restart the statute of limitations clock. Thus, it is more accurate to say that there is a three-year look-back period from the most recent copyright infringement during which a plaintiff may recover damages. See, e.g., Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 682–683 (2014).
In many cases, if statutory damages are unavailable (as discussed above), the cost and expense of a copyright infringement suit may only be viable if the plaintiff’s damages are clearly calculable and attributable directly to the infringement, and if the defendant’s profits are likely to be high. Damages under the Copyright Act are not as straightforward as one might think, so it’s always important to consult an attorney skilled in copyright practice to review what may or may not be available in terms of recovery before pulling the trigger on instituting a potentially costly and lengthy copyright infringement lawsuit.
For more information on this article and this topic, contact Charles Wallace.
[1] These limitations do not apply to copyright infringement actions involving (1) rights of attribution and integrity under 17 U.S.C. § 106A(a); (2) a work that has been preregistered under section 17 U.S.C. § 408(f) before the commencement of the infringement and that has a registration date not later than the earlier of three months after the first publication of the work or one month after the copyright owner has learned of the infringement; or (3) a work consisting of sounds, images, or both, the first fixation of which is made simultaneously with its transmission under section 17 U.S.C. § 411(c).
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