The 750 is the minimum if you CANNOT PROVE
THE INFRINGEMENT WAS WILLFUL.
Perhaps, since it was a default judgment and
the trial did not include testimony that
showed she was a "willful" infringer, that
is why the 750 amount was used.
Check this from Gigalaw :
"There is a great deal of "wiggle room" with
respect to what the court "considers just,"
and in 1999, Congress increased the amounts.
In cases in which the plaintiff cannot prove
that the infringement was "willful," the
Copyright Act allows a sum of "not less than
$750 or more than $30,000" per infringement.
However, if the court finds that the
defendant's behavior was "willful," the
court has discretion "to increase the award
of statutory damages to a sum of not more
than $150,000" per infringement.
Therefore, depending upon the judge, her
definition of "willful," and her definition
of "just," a defendant in a copyright
infringement suit may face liability of as
high as $150,000 per infringement. While
damages at the highest end of the spectrum
are rare, damages that far exceed the actual
loss to the plaintiff are not. Statutory
damages are meant to send a message and to
"sting" or make it hurt!"
Associated links:
http://www.copyright.gov/legislation/dmca.pdf
http://www.gigalaw.com/articles/2000-all/landau-2000-10-all.html
"Statutory Damages" in Copyright Law and the
MP3.com Case
By Michael Landau
Summary: A multi-million award against the
company MP3.com highlights the importance of
"statutory damages" in U.S. copyright law.
Statutory damages can apply in many
copyright cases, raising the stakes for even
minor incidents of copyright infringement.
This article explains what statutory damages
are and how they are applied.
Author: The author of this article, Michael
Landau, is a member of the GigaLaw.com
Editorial Board and a professor of law at
Georgia State University College of Law in
Atlanta. He is head of the school's
intellectual property curriculum group and a
prolific writer and speaker on intellectual
property and computer law topics. He is
licensed to practice law in the state of New
York. E-mail: mlandau@gsu.edu.
---------------------------------------------
-----------------------------------
Introduction
SEE ALSO
The Basics of U.S. Copyright Law
Ten Copyright Permission Myths
What Napster Teaches Us About Copyright Law
On September 6, 2000, Judge Rakoff, in UMG
Recordings v. MP3.com, awarded the
plaintiffs $25,000 in "statutory damages"
per CD uploaded on the MP3.com system.
MP3.com stated that "no more than 4,700 CDs"
owned by the plaintiffs were on the system,
while the plaintiffs alleged that the number
was closer to 10,000 CDs. In any event, this
places the damages at between $118 million
and $250 million.
Obviously, these "statutory damages" must be
pretty important, right? What on earth are
they?
This article will discuss statutory damages,
a major weapon in a copyright plaintiff's
arsenal, and their potential use to deter
music uploading and downloading via the
Internet. Statutory damages are available in
all copyright cases should the plaintiff so
desire. They may be awarded to the plaintiff
even though the actual market harm may be
quite small, or difficult to calculate with
certainty.
Although technically not "punitive damages,"
in the traditional tort sense in which
damages can be designed to punish someone,
they are meant to send a strong message, "DO
NOT INFRINGE!"
What the Copyright Act Says
One of the major misconceptions of parties
who use copyrighted material without
authorization is that they are only liable
for the actual profits that they make, or
for the plaintiff's actual loses, if they
are found responsible for copyright
infringement. That is indeed the traditional
measure of damages, and it is set forth in
section 504(a)(1) of the Copyright Act of
1976, which says that a copyright infringer
is liable for "the copyright owner's actual
damages and any additional profits of the
infringer..."
Section 504(c), however, gives the plaintiff
another option, namely statutory damages: "[T]
he copyright owner may elect, at any time
before final judgment is rendered, to
recover instead of actual damages and
profits, an award of statutory damages for
all infringements involved in the action."
The plaintiff, therefore, has a choice of
whether to get into a serious battle of the
accountants and economists or to ask the
court to determine a damage amount that it
"considers just," as stated in section
504(c).
There is a great deal of "wiggle room" with
respect to what the court "considers just,"
and in 1999, Congress increased the amounts.
In cases in which the plaintiff cannot prove
that the infringement was "willful," the
Copyright Act allows a sum of "not less than
$750 or more than $30,000" per infringement.
However, if the court finds that the
defendant's behavior was "willful," the
court has discretion "to increase the award
of statutory damages to a sum of not more
than $150,000" per infringement.
Therefore, depending upon the judge, her
definition of "willful," and her definition
of "just," a defendant in a copyright
infringement suit may face liability of as
high as $150,000 per infringement. While
damages at the highest end of the spectrum
are rare, damages that far exceed the actual
loss to the plaintiff are not. Statutory
damages are meant to send a message and to
"sting" or make it hurt!
Prior to 1998, statutory damages was a
determination solely for the judge. Although
the Copyright statute expressly states "the
court," the Supreme Court ruled that the
Seventh Amendment of the Constitution
mandates that statutory damages be a jury
issue if one of the parties so requests. So,
statutory damages now creates a real "wild
card."
Some Examples
A good example of statutory damages, in lieu
of actual damages, being awarded occurred in
Engel v. Wild Oats, Inc., a case involving
the reproduction of unauthorized works by
photographer Ruth Orkin on T-shirts. The
plaintiff was awarded $20,000 in statutory
damages in a case in which the defendant had
made only $1,200 profit from the sales of
the shirts.
Probably the most common use of statutory
damages is in cases involving the unlicensed
performance of music at restaurants and
stores. The usual scenario is as follows:
ASCAP or BMI, the major performance-rights
licensing societies, contacts a business
regarding the business obtaining a "blanket
license." A "blanket license" is a license
that allows the licensee to have access to
the licensor's entire library of music for
purposes of public performance of the work,
for a single yearly fee. (Playing music
without a license would be a violation of
the copyright holder's "right of
performance.") After some time of
communication between the licensing society
and the business in question, the business
ultimately refuses to obtain a license. The
licensing society then initiates a lawsuit
for copyright infringement and asks for
statutory damages. They are almost always
successful. The "going rate" is about is
about $2,500 per song played.
In addition to statutory damages, prevailing
parties are also, in some cases, entitled to
recover their attorneys' fees. Attorneys'
fees can often easily exceed the amount in
dispute in a case. Therefore, in the event
that infringement is found, the potential
exposure can be substantial. In fact, in one
case, which took years and went all the way
to the Supreme Court, the attorneys' fees
were more than $1.3 million.
Digital Music and Calculating Damages
It should be noted that businesses are not
the only defendants who may face potential
exposure for statutory damages. The
Copyright Act provides that statutory
damages may be requested in any case. With
the issue of uploading and downloading
digital music unsettled, individual users
could potentially face liability. Until the
MP3.com and Napster cases make their way
through the courts, it is not clear what
does and does not infringe.
The district court judge's decision against
Napster stated that the uploading and
downloading violated the copyright holders'
"right of distribution."
In the MP3.com case mentioned in the
beginning of this article, Judge Rakoff made
a point of noting that The Official MP3.Com
Guide to MP3, issued in 1999, recites at
page 62:
Warning. Current U.S. and international
copyright laws forbid the unauthorized
copying and distribution of music files over
the Internet. Don't be the example chosen by
some record company or recording artist to
show the rest of the world that the law
really works.
Again, the same book states at page 93:
Warning. It is against U.S. and
international copyright law to distribute
and/or sell music or any copyright-protected
intellectual property without the written
permission of the copyright holder. This
includes posting MP3 files of copyrighted
music on the Internet or making copies.
Buying a music CD does not mean that you own
the content. You merely have permission
(also known as a license) from the legal
owners of the material on that CD to listen
to it in a noncommercial setting.
Therefore, even MP3.com itself acknowledges
that Napster type uploading may be
infringement by the end user.
It is also not clear whether Section 1008 of
Title 17, The Audio Home Recording Act,
exempts the downloading of music to personal
computers from liability for infringement.
For example, Section 1008 provides:
No action may be brought under this title
alleging infringement of copyright based on
the manufacture, importation, or
distribution of a digital audio recording
device, a digital audio recording medium, an
analog recording device, or an analog
recording medium, or based on the
noncommercial use by a consumer of such a
device or medium for making digital musical
recordings or analog musical recordings.
There is first a question of whether a
personal computer's hard drive is a "digital
audio recording device" or a "digital audio
medium" for purposes of the Copyright Act. A
"digital audio recording device" is defined
as any machine, "the digital recording
function of which is designed or market for
the primary purpose of, and is capable of
making a digital audio copied recording for
private use." Because the primary purpose of
a computer is not the copying of music, it
does not fall within the definition.
There is a similar problem with the
definition of "digital audio medium."
Section 1001 of the Copyright Act defines a
"digital audio medium" as "any material
object… that is primarily marketed or most
commonly used by consumers for the purpose
of making digital audio copied recordings by
use of a digital audio recording device."
Again, the primary purpose of a computer's
hard drive is not to make or store copies of
music. Indeed, in the case involving the
Diamond Rio MP3 player, the United States
Court of Appeals for the Ninth Circuit
reached the same conclusion.
Another term that is questionable in the
Audio Home Recording Act is "noncommercial."
While admittedly the copies of music made
via Napster or similar software is personal,
a strong argument can be made that it is not
"noncommercial," but non-cash. If many
parties make copies of their MP3 files
available for the purposes of exchange, all
parties are made better off by having
exchanged and obtained additional music.
This entire system may be viewed as a
non-cash commercial exchange, similar to
barter-type exchanges.
Even the Supreme Court case that held that
the videotaping of television shows on VCRs
was a "fair use," Sony Corp. v. Universal
City Studios, Inc., may not be applicable to
the situation of music uploading and
downloading. While many interpret Sony
broadly to allow all personal taping,
others, including me, interpret the case
more narrowly. The Sony case dealt with
"time shifting," (that is, the temporary
taping of shows to watch them at a later
time), not building a library of copyrighted
works. In addition, in Sony, the user/taper
was authorized to initially view the show,
and was counted in the ratings. Sony did not
deal with having access to and taping
another person's material.
Given the unsettled state of the law,
parties who are uploading and downloading
music without authorization are at risk.
While it is usually corporate defendants who
are subject to copyright infringement, on
September 18, 2000, it was reported that a
student at Oklahoma State University faces
possible criminal copyright charges after
police found as many as 1,000 music files on
his hard drive. According to Reuters,
"Police seized the student's computer after
university officials were notified by the
RIAA (Recording Industry Association of
America)."
If the RIAA is playing such "hardball" as
encouraging the initiation of criminal
proceedings against students who download
files, it is not at all farfetched that
they, or one of the record companies, would
bring a regular infringement action and ask
for statutory damages. Because statutory
damages and/or attorneys' fees can be
devastatingly extreme, uploaders and
downloaders beware
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