Article - Damages for Copyright Infringement ... - Phillips Nizer LLP

As seen in the Fashion Mannuscript (August 2003)
THE LEGAL CORNER
By Donald L. Kreindler, Esq.
PHILLIPS NIZERLLP
DAMAGES FOR COPYRIGHT INFRINGEMENT
Owners of copyrights who institute lawsuits for copyright infringement have greater rights to recover damages than is the
case in most lawsuits. This article will discuss the types of damages that may be awarded to the copyright owner who prevails in an
action for copyright infringement.
(a) Attorneys’ Fees
Owners of copyrights are often in a superior position in seeking damages than plaintiffs in most other lawsuits. This is
because, unlike the rule applicable in most lawsuits, copyright owners who are successful in a suit for copyright infringement are
entitled to reimbursement of recoverable attorneys’ fees in an amount to be determined by the Court. This is so provided the
copyright owner has registered its copyright prior to the infringement.
The copyright owner who has prevailed in a suit for copyright infringement is also entitled to either (a) actual damages and
profits or (b) statutory damages in an amount to be determined by the Court as he may elect at any time before final judgment is
rendered. We treat here treat the two alternatives separately.
(b) Actual Damages and Profits
The successful plaintiff in a copyright infringement suit may recover his actual damages and lost profits, or he may recover the
profits that were earned by all of the infringers. For example, if the infringed design is a copyrighted fabric pattern, the copyright
owner is entitled to all of the profits obtained by (a) those who manufactured or sold the fabric containing the infringing pattern; and
(b) the garment manufacturer(s) who sold the garments containing the infringing pattern; and (c) the retailers who purchased and
resold the garments with the offending pattern. It is easy to see that, with a successful pattern, the total profits of the fabric
manufacturer(s), the garment manufacturer(s) and the retailer(s) can be very substantial. Thus, the plaintiff’s choice will usually be
to elect to receive the profits realized by the infringers. In analyzing those profits, the plaintiff need only show the gross revenue
obtained by each of the infringers and the infringers must then demonstrate the expenses directly attributable to this revenue.
Where an infringer is “willful” (usually determined by whether the infringer was aware that he was infringing a copyrighted design),
the claimed expenses will be scrutinized more closely. If the plaintiff were to choose his own lost profits, he would have to prove
specific lost sales - mere speculation that he would have received the orders that the infringer obtained, or other orders, would not
be sufficient. Thus, the copyright owner would almost always choose the profits obtained by the infringers.
(c) Statutory Damages
The copyright owner who has prevailed in his action for copyright infringement may also choose statutory damages in lieu of
actual damages or the infringer’s profits. The determination of statutory damages will be made by the Court.
Under the statute, the plaintiff will receive an award of between $7,500 and $30,000 per work “as the Court considers just”,
in a case in which the infringement is not found to have been willful. Where the infringement is found to have been willful, the
maximum award is increased to up to $50,000 per work. “Per work” refers to infringements of a particular design no matter how
many times that particular design has been infringed, as for example, where many different styles of garments utilized the infringing
pattern.
In making the determination of statutory damages, the Court will consider a number of factors including (a) the expenses
saved and profits reaped by the defendants, (b) the revenues lost by the plaintiff, (c) the value of the copyright, (d) the deterrent
effect of the award on other infringers, and (c) factors relating to individual culpability. These factors would include how innocent the
infringer’s conduct was, the infringing defendant’s cooperation in providing relevant records, and to what extent the award will
discourage the defendant from future infringements.
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(d) Conclusion
Because the costs of litigation are so high, many lawsuits (unless involving very substantial amounts) can result in a pyrrhic
victory. Because a copyright owner can choose to recover either all multiple infringers’ profits, or statutory damages, and can also be
reimbursed for all of his attorneys’ fees, copyright infringement lawsuits often represent the exception. Some textile and apparel
companies who create copyrights have actually operated profit centers in pursuing infringers of their copyrights.
The morale for the copyright owner is be aggressive in protecting your copyrights. The morale for the copyright infringer is
- beware!
As seen in the August 2003 issue of the Fashion Mannuscript.
Reproduction in part or whole without the expressed written permission of the author is prohibited.
© Copyright 2003 PHILLIPS NIZER LLP