Copyright Infringement: What are the Potential Damages?

Posted by Daniel H. Park on

When you or your company receive a copyright infringement notice, it is important to understand the potential damages you or your company may be exposed to.  On the other hand, if you discover that your copyrighted work has been infringed upon, there are certain damages you can seek arising out of the infringement.

The measure of copyright infringement damages is established by federal law under the Copyright Act of 1976.  Money damages in a copyright infringement action can include: (1) actual damages, (2) profits of the infringer, or (3) statutory damages.

Actual Damages

Actual damages are the losses suffered by the copyright owner as a result of the infringement.  This includes lost sales, lost profits, lost licensing revenue, or any other demonstrable monetary loss resulting from the infringement. 

While the concept is easy to understand, measuring actual damages can prove difficult.  Actual damages must be based on measurable numbers; an estimate of loss is simply not enough.  For example, a copyright owner could try to establish actual damages by demonstrating that sales of the copyrighted work declined immediately upon infringement by a demonstrable amount.  The owner would also have to show that the infringement caused the decline in sales.  Because such calculations are often imperfect, and causation is not always clear, expert witness testimony may be necessary to explain the measure of damages and establish the damages were caused by the infringement. 

Profits of the Infringer

In addition to actual damages, a copyright owner can seek the infringer’s profits made from infringing on the copyrighted work. The concept is clear: the infringer should not be allowed to keep the benefit of their wrongful actions.

Profits of the infringer are awarded only in the amount they exceed the actual damages resulting from the infringement. This measure of damages may also require expert testimony.

Statutory Damages

As an alternative to actual damages and profits of the infringer, the Copyright Act allows statutory damages. As its name implies, statutory damage amounts are set forth in the Copyright Act and may be awarded by a judge or jury. Given the difficulties that can arise in proving actual damages and infringer’s profits, copyright owners often look to statutory damages to recover their losses.

However, statutory damages are only permitted if the copyright owner has formally registered their work with the U.S. Copyright Office within three months of the creation of the work or one month of discovery of the infringement.  Registration of a work is therefore vital not only to bringing a copyright infringement lawsuit but also to ensuring that statutory damages are available as a remedy.

Statutory damages are specified in the Copyright Act as follows:

  • For each copyrighted work infringed upon, $750 to $30,000 per work;
  • Increased statutory damages of up to $150,000 per copyrighted work infringed upon if the infringement is found to be willful;
  • Where the infringer “was not aware and had no reason to believe that his or her acts constituted an infringement of copyright”, the court may reduce statutory damages to as little as $200.

The amount awarded is on a per copyrighted work basis.  So, an infringing book would be entitled to one award, not an award per copy sold.  The amount is determined by a judge or jury.  Given the range of potential statutory damages, whether an infringement is willful is often one of the main battlegrounds in a copyright litigation.

Conclusion

Understanding copyright infringement damages is crucial both when assessing potential exposure when an infringement notice is sent and when assessing potential recovery you may be entitled to when your work is infringed upon.  If you have questions about a copyright notice, please let me know if I can help.