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Government taskforce proposals could reduce mega-damages in US copyright cases

By | Published on Friday 29 January 2016

US Department Of Commerce

A report from the US Department Of Commerce has recommended that more guidance be provided when statutory damages are awarded in copyright infringement cases in America, the result of which would likely be a curtailment of the mega-damages you often see awarded, especially in online piracy litigation.

Rather than being directly linked to the infringer’s gains, or the copyright owner’s losses, under US copyright law courts can award damages anywhere between $750 and $150,000 per infringement.

It’s not unknown for damages at the top end of the scale to be awarded, which means – where you have online infringement cases that will usually list tens if not hundreds of tracks that have been infringed – you end up with defendants facing damages bills of many millions.

This might make sense for corporate defendants, but there have been some key cases where individuals who will never be able to afford such sums were nevertheless faced with having to pay millions in damages.

The Department Of Commerce’s Internet Policy Taskforce, which has been reviewing three key areas of copyright law, isn’t proposing changing the damages scale in infringement cases, but says that more guidance should be provided to judges and juries when damages are being considered.

The proposed list of considerations includes the plaintiff’s actual losses as a result of the infringement, the value and nature of the infringed works, whether the total sum is “commensurate with the overall harm”, and the defendant’s ability to pay. The need to deter future infringements is also on the list, as is the need to “punish” the infringer, though most of the points raised would probably be more likely to lessen than increase overall damages.

Commenting on the report, US Secretary Of Commerce Penny Pritzker said: “Through extensive public consultations, the Internet Policy Taskforce has produced a detailed analysis of important policy issues raised for copyright in the digital age. Its recommendations will maintain strong and balanced copyright protection while preserving the free flow of information required for innovation and our digital economy to thrive”.

The other two issues considered by the taskforce were the licensing of remixes and the so called ‘first sale doctrine’, which says consumers are entitled to resell CDs they legitimately buy (which limits the copyright owner’s ‘distribution control’).

On the latter point, the key question was whether to expand the doctrine to digital, while on remixes there was talk of compulsory licensing or more copyright exceptions. On both issues, the taskforce ultimately decided current copyright law is just fine. Though making things a little bit simpler for remixers when it comes to licensing would be nice.

Both of these latter decisions were welcomed by the US National Music Publishers Association, whose boss David Israelite told reporters: “After working with the US Patent And Trademark Office extensively to prevent the creation of new compulsory licenses and exceptions for remixes, we are glad to see that the IPTF has agreed that these new regulations would be damaging to creators. Additionally, we applaud the USPTO’s decision not to support the radical expansion of the first sale doctrine to digital transmission, which could prevent music creators from being fairly compensated for the resale of their works”.

Perhaps unsurprisingly, Israelite did express some concerns on the proposals around statutory damages, though he was basically upbeat about the taskforce’s report. He concluded: “While we are concerned that the report’s recommendations on creating a framework to guide statutory damages could unnecessarily limit the proper damages awarded to rights holders, we are ultimately encouraged by the report’s findings and hope it leads policymakers to enhance protections for creators in the digital age”.

Of course it remains to be seen what those policymakers make of the proposals, which are set out in full in this here white paper.