Episode 94
E94: Calculating Damages for Copyright Infringement
🎙️ In our latest episode, Erin uses the recent U.S. Supreme Court decision on copyright infringement to explore the intricacies of copyright damages. Whether you're a creator, a business owner, or an enthusiast of intellectual property law, this episode has invaluable insights for you!
🔍 Three Key Takeaways:
- Statutory vs. Actual Damages: Understand the difference and application of statutory and actual damages in copyright infringement cases.
- Supreme Court's Stance: The recent ruling affirms that copyright owners can seek damages for infringements beyond the three-year look-back period previously enforced by some circuits.
- Importance of Copyright Registration: Find out how timely registration of your work can leverage your ability to claim statutory damages, which can significantly simplify litigation processes.
Whether you're protecting your creative works or using copyrighted materials, understanding these points can save you from potential legal battles!
Connect with Erin to learn how to use intellectual property to increase your income and impact. hourlytoexit.com/podcast.
Erin's LinkedIn Page: https://www.linkedin.com/in/erinaustin/
Hourly to Exit is Sponsored By:
This week’s episode of Hourly to Exit is sponsored by the NDA Navigator. Non-disclosure agreements (NDAs) are the bedrock of protecting your business's confidential information. However, facing a constant stream of NDAs can be overwhelming, especially when time and budget constraints prevent you from seeking full legal review. That's where the NDA Navigator comes to your rescue. Designed specifically for entrepreneurs, consultants, and business owners with corporate clients, the NDA Navigator is your guide to understanding, negotiating, and implementing NDAs. Empower yourself with legal insights and practical tools when you don’t have the time or funds to invest in a full legal review. Get 20% off by using the coupon code “H2E”. You can find it at www.protectyourexpertise.com.
Think Beyond IP YouTube Page: https://www.youtube.com/channel/UCVztXnDYnZ83oIb-EGX9IGA/videos
Music credit: Yes She Can by Tiny Music
A Team Dklutr production
Transcript
Today's exciting episode is something hot off the presses.
Speaker:If you can consider a U.
Speaker:S.
Speaker:Supreme Court decision about copyright infringement hot, but we're going with it.
Speaker:So recently, as I'm recording this in May, 2024, the U.
Speaker:S.
Speaker:Supreme Court settled a conflict among federal courts of appeal, that
Speaker:whether or not a copyright owner can recover damages for infringements
Speaker:that occurred more than three years before commencement of the lawsuit.
Speaker:So the second circuit, uh, said that the copyright plaintiff would be limited
Speaker:to damages that are only three years.
Speaker:look back from the filing of the complaint.
Speaker:So they can't look at damages for infringements that occurred before
Speaker:three years back from the filing of the complaint, whereas the 9th and 11th
Speaker:circuits disagreed and said it wasn't limited to that three year look back.
Speaker:And so in a 6 3 decision, Authored by Justin Kagan, the Supreme Court
Speaker:affirmed the 11th circuit's ruling and held that the Copyright Act entitles a
Speaker:copyright owner to recover money damages flowing from a timely infringement
Speaker:claim even if the infringement at issue occurred more than three years
Speaker:before the initiation of the suit.
Speaker:There are of course some nuances to that.
Speaker:But generally, we want to look, it is a win because we don't want
Speaker:to have different results just because, you know, it is federal law.
Speaker:So it should apply equally all over the country.
Speaker:They don't want to have different results about what damages are available to us.
Speaker:If you file on the 9th circuit or the 11th circuit versus filing the 2nd circuit.
Speaker:So that's great.
Speaker:So all that to say that, let's take this moment to review.
Speaker:Damages for copyright infringement.
Speaker:And so we're going to have a little refresher here.
Speaker:It may even be the deepest dive into damages that I've done.
Speaker:I know I've done some light every view of the damages for copyright infringement.
Speaker:So let's go a little bit deeper today.
Speaker:So first, you know, what damages are available?
Speaker:Under the US copyright law, so it provides that the infringer of a
Speaker:copyright is liable for either the copyright owners actual damages, plus
Speaker:additional profits of the infringer, or they can get statutory damages.
Speaker:It's actual damages or statutory damage.
Speaker:You cannot do both.
Speaker:So let's talk about actual damages and profits first.
Speaker:So as the name suggests, actual damages refers to the compensation
Speaker:awarded to a copyright owner based on the actual harm that the owner
Speaker:suffers from the infringement.
Speaker:So they can be calculated as the real financial loss.
Speaker:So maybe lost profits from sales that didn't occur because of the infringement.
Speaker:Also, they have access to the profits made by the infringer.
Speaker:one might be more like maybe the infringer sold it for more than
Speaker:you could have sold it for, meaning you should have raised your prices.
Speaker:if your loss profits are higher, then go after that.
Speaker:If their profits are higher than you go after that.
Speaker:and then, so maybe it's a combination of the two, maybe, they, create a derivative
Speaker:that cause created, more profits.
Speaker:So you can get your loss sales and, profits from the derivative.
Speaker:And so it's, you know, you can't double dip, but you can, aggregate your losses
Speaker:and the profits of the infringer.
Speaker:So the complication here is, on proving actual damages is that you do need to
Speaker:have to prove evidence of an actual loss.
Speaker:So you need to have be keeping, you know, sales records, financial statements,
Speaker:anything that would show that decrease in revenue that is attributable.
Speaker:to the infringement.
Speaker:So, if your sale is just having to go down because, nobody wants it
Speaker:anymore, it's not attributable to the infringement, that would not be, an
Speaker:actual damage due to the infringement.
Speaker:So you do need to have, some records that So you can make that
Speaker:connection, which makes it a little more complex than statutory damages,
Speaker:which we'll talk about in a minute.
Speaker:for when we're looking at the infringer's profits, that's a little easier to prove.
Speaker:All you have to do is show the infringer's gross revenue.
Speaker:That's considered their profits.
Speaker:They can, say, well, I also have these expenses too.
Speaker:So this is my profit, but obviously that's a little bit easier to prove,
Speaker:they have clearly been selling it and have them and had some gross
Speaker:revenue based on the infringement.
Speaker:All right.
Speaker:So that's your actual profits, and, actual damages and infringers
Speaker:profits that you can get as damages.
Speaker:Okay.
Speaker:The next category are statutory damages, and there are some
Speaker:eligibility requirements, which we'll talk about in a second.
Speaker:But if eligible, you can elect the copyright owner can elect to recover
Speaker:instead of actual damages and profits an award of statutory damages.
Speaker:So these are the damages that the court can award for copyright infringement,
Speaker:which do not require the copyright owner to prove actual financial
Speaker:Loss, and this is really helpful if it is hard to prove your losses.
Speaker:Maybe you can't prove that direct relationship between the infringement
Speaker:and a decrease in sales, or maybe you haven't really had any sales yet.
Speaker:or there's, not enough, of, profits to, or damage to really
Speaker:make sense to pursue legal action.
Speaker:But, if you have access to statutory damages, that can make a big difference.
Speaker:So what are the eligibility requirements for statutory damages?
Speaker:It.
Speaker:requires timely registration of the work with the U.
Speaker:S.
Speaker:Copyright Office.
Speaker:So to qualify for statutory damages, you must have registered the copyright either
Speaker:before the infringement began or within three months of first publishing the work.
Speaker:So publishing means when you made it available to the public.
Speaker:So when it's still like hanging out in your computer, that's not publishing.
Speaker:That's creation, which is a different measure.
Speaker:for statutory damages, it's within three months of first publishing the work.
Speaker:So statutory damages can range, from 750 to 30, 000.
Speaker:1, 000 per work as determined by the court.
Speaker:We'll talk about what those variables are.
Speaker:And if there is a willful infringement, the statutories can be increased up
Speaker:to 150, 000 Per work, so obviously, talking about the cost of litigation
Speaker:and whether or not it's worth it to pursue an infringement claim.
Speaker:This can make a big difference, especially if you haven't really
Speaker:made any profits from your work yet.
Speaker:Or the profits have been relatively low.
Speaker:If you have access to statutory damages, one, you don't have
Speaker:to prove your actual loss.
Speaker:And two, it makes it a much simpler case to prove.
Speaker:Therefore, keeping, attorneys fees, lower than if you have to prove
Speaker:all these, all the other stuff.
Speaker:So Will the court find that the infringement is willful?
Speaker:So it can, if it, can show that the infringer knew what they were doing
Speaker:was wrong, this could be the case where, you sent a cease and desist
Speaker:letter and instead of, stopping the infringement, they just changed their
Speaker:URL or did something to try to hide.
Speaker:And so they, okay, I'll shut down that website and.
Speaker:Open up another one.
Speaker:Obviously, that is a very willful infringement versus someone who, as
Speaker:soon as they get caught, they take it down, as you know, because I
Speaker:definitely preach this all the time and infringement is an infringement.
Speaker:It doesn't matter if you didn't realize you couldn't use it or, oh,
Speaker:I thought it was on the Internet.
Speaker:So it was free or, oh, Innocent or not, that will depend where in the
Speaker:spectrum of damages falls, but not whether or not it is an infringement.
Speaker:If you take somebody else's copyrighted work without permission and use
Speaker:it without their permission, it is infringement and the only issue is
Speaker:where in the scale of damages it falls.
Speaker:So let's talk about calculating the damages, you know,
Speaker:how much in that spectrum.
Speaker:It's a pretty big spectrum where the damages fall.
Speaker:So it varies and it will depend on the seriousness of the infringing
Speaker:act and also depend on the financial worth of the infringer.
Speaker:So the court is going to determine this.
Speaker:So, um.
Speaker:Innocent infringements again, still infringement, but if it really, if
Speaker:the court binds and the infringer can prove that it really was innocent,
Speaker:I don't even know what this would be, honestly, they can reduce
Speaker:it to as little as 200 per work.
Speaker:so maybe an innocent infringement might be, I had a license.
Speaker:let's use this one.
Speaker:like the stock photo place and you get a license for it and your
Speaker:license is to use it on your website.
Speaker:so you have someone who does your email list or something.
Speaker:And, And they're like, oh, I like this image.
Speaker:And so, yeah, you have a license for all the images on your website and they put
Speaker:it in your newsletter and your license doesn't include use in the newsletter.
Speaker:maybe that might be considered an innocent infringement.
Speaker:Again, I don't, know how it becomes innocent.
Speaker:I mean.
Speaker:we should know we should all know better that we can't use a works that we don't
Speaker:own without a license or permission.
Speaker:So, let's just use that 1 as a sample.
Speaker:So, you thought you had a license for it.
Speaker:It was reasonable to believe that if you can put it on your
Speaker:website, you can put it in your newsletter, but you actually can't.
Speaker:So, let's, call that innocent infringement.
Speaker:And on the other hand, if, it was something that was willful, like
Speaker:our example, you got that cease and desist, but instead you tried to,
Speaker:hide your use instead of, stopping the use, and the court can find as much
Speaker:as 000, penalty, damages per work.
Speaker:that really isn't a penalty, right?
Speaker:I mean, that is intended to punish the infringer, in that circumstance.
Speaker:and so again, that spectrum will depend on the circumstances
Speaker:now for an actual calculation.
Speaker:I'm going to use the example of a website that has used 3 copyrighted photos.
Speaker:All from the same photographer, maybe all from the same, source.
Speaker:And so 3 photographs from the same source used on 1 website without permission.
Speaker:And so, if my range of, statutory damages is 750 to 30, 000.
Speaker:Let's just use 10, 000 per photo.
Speaker:It's a lot, but let's just use it anyway.
Speaker:so what would the damages be?
Speaker:I've got one website from one source.
Speaker:three photographs.
Speaker:So damages are calculated per work, not per active infringement.
Speaker:There was only one active infringement.
Speaker:I took these photographs, I put them on my website, but it was three works,
Speaker:three separate copyrighted photographs.
Speaker:So the damages are per work.
Speaker:So at 10, 000 per Work that would be a 30, 000, statutory damages claim for that.
Speaker:so every song, every book, every photograph, that would be a
Speaker:separate work, anything that's a separate work is registered under
Speaker:the copyright office is eligible for the separate statutory damage.
Speaker:I don't know, it should be a good thing.
Speaker:will look into this.
Speaker:Like, let's say, I take.
Speaker:One.
Speaker:No, I know the answer to this.
Speaker:So if I take, one paragraph from a book, if I take three paragraphs
Speaker:from a book, that is still one work.
Speaker:That is not three works.
Speaker:All right, so as you can see, that's a pretty heavy club to
Speaker:wield as a copyright owner if you have access to statutory damages.
Speaker:Now, it doesn't mean you're going to get 10, 000 for photo,
Speaker:again, that's pretty high.
Speaker:let's say though, somebody uses that photograph in advertising that
Speaker:they know, you don't get to use.
Speaker:Photographs for free and advertising.
Speaker:that's going to be a bigger number than if you use it on your website that,
Speaker:, frankly, you know, nobody fits in.
Speaker:so it'll be in there, but that's the continuum of damages that are available,
Speaker:for, minor infringements, I'll call it versus major or willful infringements.
Speaker:So, obviously, when you have statutory damages, it's in everybody's
Speaker:interest to just settle out of court.
Speaker:I mean, nobody wants to you're going to lose.
Speaker:I mean, you infringed and it's eligible for statutory damages,
Speaker:why would you go to court?
Speaker:but you do want to have that leverage to keep it out of court.
Speaker:as I was writing this script, and it's hard to imagine I use a script
Speaker:because I always deviate from it, but I do start with a script.
Speaker:And I was thinking about the fact that this is what I hear a lot.
Speaker:Like, how do I, get as much as possible On to one copyright
Speaker:registration because there are fees involved with registering copyrights.
Speaker:They're not very high, frankly, but there is some work involved and
Speaker:some resources involved register something in the copyright office.
Speaker:And the idea is to get, compilation or entire course or a series on
Speaker:to one copyright registration.
Speaker:But what I was thinking is, if your statutory damages are calculated
Speaker:per work, does it make sense just as a kind of prophylactic against
Speaker:copyright infringement to have each, like, let's say, module of a course
Speaker:registered as a separate work.
Speaker:you don't lose Protection that way, you have more works.
Speaker:So if I have, let's say I have a 10 module course and it is sold together, like
Speaker:you cannot buy the courses individually.
Speaker:You can only buy them together.
Speaker:So it would qualify as a single work for registration purposes.
Speaker:You don't have to register each of let's say there's 10 modules.
Speaker:You can register them together because they're only available as one work.
Speaker:so that would be one work.
Speaker:Somebody steals one or more portions of my course.
Speaker:It's one work that's been infringed.
Speaker:And so that would be your statutory damages for one work versus if I have
Speaker:registered each module separately, even though you can only buy them together,
Speaker:but I've registered them separately.
Speaker:And therefore each module is a separate work.
Speaker:That same infringement of my module course is now an
Speaker:infringement of 10 separate works.
Speaker:So this is just to remind you, statutory damages can be very high, and even for
Speaker:innocent uses, as a copyright owner.
Speaker:Hey, great.
Speaker:You have access to these statutory damages.
Speaker:However, on the other side of that, if you are the infringer, even if you are
Speaker:an innocent infringer or an accidental infringer or an ignorant infringer,
Speaker:because you don't know better, although you should, if you're listening to this
Speaker:podcast, want to make sure we're always getting permission to use Anything that
Speaker:you don't own, anything that falls within, copyright protection, if you don't own it,
Speaker:make sure you have permission to use it.
Speaker:I have created a number of resources to make sure that you understand what
Speaker:needs to be done to get permission.
Speaker:and so the information is available to you.
Speaker:So, don't forget IP is fuel.
