Attorney Steve® Copyright Law Essentials - Statutory Damages on Default

Introduction

"Taking a default" when one is sued for copyright infringement is always a risky proposition.  When you default on a complaint (don't respond), you essentially admit all of the "well-plead" allegations made.  This means, you may be admitting to WILLFUL COPYRIGHT INFRINGEMENT even though you may not believe that to be the case.  In these situations, you are opening yourself up to the discretion of the Court and you could be hit with up to $150,000.  Here is how one federal court in Washington (9th circuit) analyzed the issue in NOT awarding the full statutory amount.  These are some factors you may want to consider as a Plaintiff or Defense counsel.

Court's Order

"The Court has wide discretion in determining the amount of statutory damages to be awarded within the ranges provided by 17 U.S.C. § 504(c)(1)–(2). Harris v. Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir. 1984). It must do what is just in the particular case, “considering the nature of the copyright, the circumstances of the infringement and the like . . . but with the express qualification that in every case the assessment must be within the prescribed [statutory range].

Within these limitations the court's discretion and sense of justice are controlling.” See F.W. Woolworth Co. v. Contemp. Arts, Inc., 344 U.S. 228, 232 (1952). “Statutory damages are particularly appropriate in a case . . . in which [a] defendant has failed to mount any defense or to participate in discovery.” Jackson v. Sturkie, 255 F. Supp. 2d 1096, 1101 (N.D. Cal. 2003).

Further, “[b]ecause awards of statutory damages serve both compensatory and punitive purposes, a plaintiff may recover statutory damages ‘whether or not there is adequate evidence of the actual damages suffered by plaintiff or of the profits reaped by defendant.” See L.A. News Serv. v. Reuters Television Int’l., Ltd., 149 F.3d 987, 996 (9th Cir. 1998) (quoting Harris, 734 F.2d at 1335); see also Getty Images (U.S.), Inc. v. Virtual Clinics, No C13-0626 JLR, 2014 WL 1116775 (W.D. Wash. Mar. 20, 2014).

Appplying the rational to the case at hand

The Court continued:

"MG Premium has established that Defendants willfully infringed its copyrights, 2,433 times, and an award of statutory damages is warranted and required.

However, the Court in its discretion declines to award the maximum per-video statutory damages.

First, while MG Premium has demonstrated that maximum statutory damage awards are often affirmed when the infringement is willful, it has not cited a case making or affirming a statutory damages award anywhere near the sum it seeks, particularly against individual defendants. Further, MG Premium's claimed lost revenue is speculative; the 3.2 million users it cites admittedly did not pay Defendants the sum it claims it charges for access to its adult videos. In other words, MG Premium did not lose, and Defendants did not make, $727 million when Defendants provided free access to MG Premium's protected works. $365 million is similarly not a fair or accurate estimation of any lost revenue, or of illicit profit.

The Court agrees that a large award also serves the laudable and important goal of deterring infringement, but the amount sought is far more than “large,” it is obscene.

The deterrent effect of a more reasonable—but still massive—award will be adequate, even though it is perhaps unlikely that any significant judgment will be paid. It is difficult to imagine that the five individual defendants have the sort of assets required to pay the judgment MG Premium seeks. Furthermore, the injunction MG Premium seeks will also deter further infringement, and it is far more likely be effective.

In its discretion and in the interests of justice, the Court will therefore award statutory damages of $15,000 for each of the 2,433 offending videos, for a total of $36,495,000.

Injunction Discussed

The award is against the five individual defendants, jointly and severally. MG Premium also seeks an injunction, arguing that monetary damages alone are not adequate. The Copyright Act authorizes the Court to “grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C. § 502(a). The Court may grant a permanent injunction where the plaintiff demonstrates that:

(1) “it has suffered an irreparable injury;”

(2) “remedies available at law, such as monetary damages, are inadequate to compensate for that injury;”

(3) “considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted;”

and

(4) “the public interest would not be disserved by a permanent injunction.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).

The Court does so in the exercise of its equitable discretion. Id. MG Premium argues that it has demonstrated each of these elements, and the Court agrees. As to irreparable harm., MG Premium has demonstrated that the Defendants compete with it and that their infringement has caused a loss of market share, customers, and good will. See Dkt. 36 at 13–15. It is also apparent that monetary damages will not be adequate to prevent future infringement, or to stop the injuries MG Premium is suffering.

It is not likely that MG Premium will be able to collect its default judgment. Furthermore, the balance of hardships in the absence of injunctive relief tilts sharply toward the plaintiff, and the public interest is served by granting injunctive relief. See Apple Comput., Inc. v. Franklin Comput. Corp., 714 F.2d 1240, 1255 (3d Cir. 1983) (“[I]t is virtually axiomatic that the public interest can only be served by upholding copyright protections and, correspondingly, preventing the misappropriation of the skills, creative energies, and resources which are invested in the protected work.”). In short, MG Premium is entitled to a permanent injunction precluding Defendants from infringing on its copyright-protected works. MG Premium also asks the Court to order non-party Verisign, Inc. (the registry for .com domain names) to disable the domain “yespornplease.com” and transfer it from the defendants to MG Premium. Dkt. 36 at 17 (citing, inter alia, China Cent. Television v. Create New Tech. (HK) Ltd., No. CV 15-01869 MMM (AJWx), 2016 WL 6871281 (C.D. Cal. Apr. 4, 2016); DISH Network L.L.C. v. Dima Furniture, Inc., No. TDC-17-3817, 2019 WL 2498224 at *8–9 (D. Md. June 17, 2019)).

The Court agrees, and will ORDER that Verisign, Inc. DISABLE and TRANSFER Defendants’ domain name “yespornplease.com” to plaintiff MG Premium.

Finally, MG Premium seeks a relatively modest $34,874 in attorneys' fees and $2,085 costs, for an additional $36,959. These fees and costs appear reasonable in light of the stakes and the effort reflected in the record, and the Court will order such an award of fees and costs under 17 U.S.C. § 505.

The Clerk shall enter a JUDGMENT consistent with this Order and close the case.

IT IS SO ORDERED.

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Since 2004 we have helped hundreds if not thousands of companies and individuals handle their business and intellectual property disputes.  We are a top 15 copyright infringement law firm (in regard to a number of cases handled in the last few years - as indicated by LexMachina).  We have appeared in over 250 federal court cases (and a good number of state court lawsuits for fraud, breach of contract, trade secret theft, and many other cases).  Call us at (877) 276-5084 for copyright matters including but not limited to Strike 3 BitTorrent subpoena response with ISP, Sofware licensing disputes with Vero, Solidworks, Microsoft, Autodesk, and others, Joe Hand boxing piracy cases (illegal interception of TV signals), IPTV piracy cases, DMCA anti-circumvention cases, and anything else that uses the word "COPYRIGHT" in a dispute letter.  You can also fill out our contact form and we will contact you.  Please provide sufficient details.