Attorney Steve® Copyright Law Essentials - Damages following a default judgment in an infringement lawsuit.
Introduction
There are many different types of copyright infringement cases our firm can handle. For example:
- Photo infringement (using someones photos on your business website)
- Strike 3 Holdings illegal sharing of adult videos
- Illegal broadcast of boxing and soccer matches without the proper commercial license (ex. bars and restaurants showing UFC fights without paying the license fee)
- Jewelry infringement (infringing on a jewelry design on your Etsy page)
- Music infringement (using long clips in your videos without a proper fair use defense)
- Illegal broadcasting of protected content (circumvention of access rights under the DMCA), for example, stealing movie and video content and re-selling that trying to undercut their pricing. This can raise alarm bells and lead to lawsuits from companies like ACE, MPAA, Dish-Nagrastar (SlingTV) and others and huge penalties can be on the line
- Software audits and license compliance disputes (ex. Vero/Hexagon, Microsoft, Adobe, Siemens, IBM, Oracle, SAP, Autodesk and others).
And the list goes on. All these various types of "infringements" can lead to a lawsuit being filed in Federal Court (we have appeared in over 325 such cases since our founding in 2004).
The problem with these lawsuits is they can break you financially. What we refer to as a "bet the farm case" and choose your legal counsel wisely. Many companies may have to file bankrupt because they cannot afford the legal fees to defend the case. In other cases, not being able to afford a defense, the Defendant may need to consider to "defaulting" on the lawsuit.
Getting a "default judgment" is a two step process in federal court:
1. Once the time has passed for the Defendant to answer, the Plaintiff can file a form asking the Court clerk to "enter the default." The clerk will typically do this. This default does two things: (a) it admits all the well-plead allegations made in the complaint (ex. you likely just admitted to "willful copyright infringement" which will raise the damages potentially), and (b) It cuts off your right to raise any defenses.
2. After the default is entered, the court will usually set a "prove up hearing" wherein the Plaintiff may be allowed to come in with evidence of their damages (ex. lost profits, lost licensing fees), or make arguments as to the amount of "statutory damages" and attorney fees they are entitled to. In some cases, you may be allowed to appear and challenge their calculations and assessments (while not being allowed to raise defenses, or challenge the merits of the case).
This is why it is important to look at all your options before you decide whether to litigate, file BK, accept the default (and take your chances on what the judge may award, etc.).
For example, there is one company (G&G Closed Circuit that asks for demands as high as $50,000 to settle your case). If you won't agree to their terms they might very well threaten to take the case to Court, or seek a default if they have already sued you. In some cases, their demands can be much higher than what the judge is willing to award, and in those cases if you are right, you are better off taking the default than cowing down to their settlement demands. This is not legal advice, but just something to consider.
Even after the default is entered, the Judge holds the cards on the final judgment.
Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Circuit 1987)
This case notes that Rule 55 gives the court considerable leeway as to what it may require as a prerequisite to the entry of a default judgment.
"The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." (citations omitted). Geddes v. United Financial Group (9th Cir. 1977).
But it is the judge that decides the amount of damages necessary to compensate the Plaintiff.
Contact an IP Infringement Law Firm
These decisions are never easy, but it highlights the importance of hiring an experienced copyright technology law firm with LITIGATION EXPERIENCE. If you need to discuss your case, call us at (877) 276-5084 or email us through our contact form.
