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Statutory Damages in the the Copyright System
As provided in Section 504 of the Copyright Act , copyright owners fighting infringers in court may opt to seek statutory, rather than actual, damages. A feature of U.S. copyright law since the very first copyright statute in 1790, the purpose of statutory damages is to provide relief to copyright owners in those situations where it is difficult or impossible to measure actual damages. The statute sets out the range of statutory damages. For "regular" infringement, the jury may award from $750 to $30,000 per work infringed. But if the infringement is "willful," then the jury may award up to $150,000 per work infringed. Moreover, if the jury finds that the infringement was not intentional, and certain other conditions are met, then "the court in its discretion may reduce the award of statutory damages to a sum of not less than $200." The $150,000 figure stands at the center of complaints against statutory damages, causing at least one excitable advocate to claim that potential statutory damages resulting from a single copyright infringement case can be "as high as approximately $100+ trillion in 2015 dollars, almost twice the world's current gross domestic product." Such vacuous commentary is unfortunately characteristic of the debate over statutory damages, where emotions tend to run roughshod over clear thinking.

Critics' "vagueness" complaint focuses on the statute, which says merely that the jury should award an amount within the range that it considers "just." And if the bare statutory mandate was all that juries had to go on, then the critics would have a point. But the critics ignore reality: That is, jurors in copyright cases are not simply told to award a "just" amount, but are in fact given detailed instructions by the judge as to the factors they should consider. For example, the " Federal Civil Jury Instructions of the Seventh Circuit " provide this detailed set of instructions:

In determining the appropriate amount to award, you may consider the following factors:

  • the expenses that Defendant saved and the profits that he earned because of the infringement;
  • the revenues that Plaintiff lost because of the infringement;
  • the difficulty of proving Plaintiff's actual damages;
  • the circumstances of the infringement;
  • whether Defendant intentionally infringed Plaintiff's copyright; and
  • deterrence of future infringement.

And instructions can be more extensive in specific cases. For example, in Sony BMG Music Entertainment v. Joel Tenenbaum( a well-known case regarding statutory damages ), the judge instructed the jury to consider eight factors in determining the amount of statutory damages. One proposal (of three) made in the IPTF's white paper is to incorporate into the statute of list of factors for courts to consider, but the courts are largely doing so today.

Further, if the statute is really "too vague" and jury instructions are insufficient, then one might expect an epidemic of unreasonable statutory damages awards. Not according to the data.

Lex Machina, which recently released detailed data on intellectual property (IP) litigation (subscription required), found that from 2000 to 2015, total damages in copyright cases involving statutory damages were a little over $674 million (including legal fees, etc.), or about $45 million per year. Moreover, the top 28 cases accounted for $226 million, or 34 percent of the total damages. Put another way, about one-third of damages are accounted for by the top 2 percent of damage judgments.