BY:Michael I. Rudell
(Originally published in Mr. Rudell’s Entertainment Law column in the New York Law Journal, September 23, 2004.)
The First Circuit has held that the amount of statutory damages that a plaintiff may recover in an action against a single defendant depends on the number of works that are infringed and the number of individually liable infringers, and is unaffected by the number of infringements of those works.1 This interpretation of the present Copyright Act marks a change in the scheme for awarding statutory damages under the Copyright Act of 1909.
The plaintiffs are the children of Guillermo Venegas-Lloveras, a noted composer, who inherited the copyright in 197 of his songs. They filed a copyright infringement action against Sonolux in September of 2001, alleging that the defendant had produced 186 recordings of two of the copyrighted songs on 16 different albums by different artists. Plaintiffs had registered their copyright claims to both songs.
Sonolux failed to answer the complaint and default judgment was entered against it. Plaintiffs elected to seek statutory damages rather than to try to prove actual damages and defendants’ profits. Accepting the plaintiffs’ statement of the correct measure of damages, the district court awarded them 1.6 million dollars in statutory damages for the infringement of the two songs, concluding that “an award of $100,000.00 for each of 16 works, or a total of $1,600,000.00 represents a fair measure of damages in this case.”
Sonolux filed a motion to set aside the default judgment, or in the alternative, to amend the default judgment because it alleged the district court had erred in its damages calculation. A different judge from the one who first addressed the question of the correct measure of damages denied Sonolux’s motion to set aside the default judgment, but found the damages calculation to be a “manifest error of law” and reduced the damages award to $200,000.00, using the method of statutory damages calculation advanced by Sonolux. Plaintiffs appealed the grant of the motion to amend the default judgment and defendant cross-appealed the denial of its motion to set aside the default judgment.
After discussing and upholding the entry of the default judgment, the Court discussed the calculation of statutory damages. Section 504(c) of the Copyright Act states that the copyright owner can elect to recover statutory damages “for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually.” The second district court judge read that language as meaning that the infringer’s statutory damages liability is based on the number of infringed works, rather than on the number of infringing works.
In support of that interpretation, that judge cited the report of the Committee on the Judiciary which states that “A single infringer of a single work is liable for a single amount. . . no matter how many acts of infringement are involved in the action and regardless of whether the acts were separate, isolated, or occurred in a related series.” 2
In its decision, the Court also cites case law in support of this interpretation and refers to “Nimmer on Copyright” which states that “The current Act states that only a single minimum, and a single set of statutory damages, will be applicable ‘for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually. . . ‘”
The Court indicates that although there is some arguable ambiguity as to whether the song is the “work” referred to in the statute, the legislative history referred to above dissolves this argument.
The D.C. Circuit, which is the one circuit court to have addressed this issue squarely, has adopted the reading advanced by the second district court judge. Language from the Second Circuit’s opinion in Twin Peaks Prods., Inc. v. Publ’ns Inter’l, Ltd.3 also is consistent with such interpretations, although in that case the issue was not directly presented because only one infringing work was in issue. That court stated that “The current statute shifts the unit of damages inquiry from number of infringements to number of works [infringed].”
The Court states that the current statute represents a departure from the case law interpreting the statute under the 1909 Copyright Act. Under that Act, two separate infringements of the same copyrighted work would give rise to two separate claims for minimum damages.
Accordingly, the Court holds that under section 504(c), the total number of “awards” of statutory damages that a plaintiff may recover in any given action against a single defendant depends upon the number of works that are infringed and the number of individually liable infringers, and is unaffected by the number of infringements of those works.
Nevertheless, the Court does not simply affirm an award of $200,000.00 and remand with instructions to enter that judgment. It notes the possibility that, by applying the correct rules, the award would be higher. At the $100,000.00 per work rate set by the original judge, the corrected calculation automatically would produce a reduction in the judgment to $200,000.00. However, the Court notes that it may be that the first judge would have increased the number of damages per work, given the number of infringements and given his finding of willfulness, if he had understood that “works” referred to the infringed songs rather than the infringing albums.
In this context, the decision indicates that the sliding scale for statutory damages is designed, in part, to allow courts to increase the amount of the award in proportion to the number of individual infringements. It is also designed to deter willful infringements, and the award can go up to $150,000.00 per work where willfulness has been found.
The Court indicates that the first judge stated that “an award of $100,000.00 for each of the 16 works, or a total of $1,600,000.00, represents a fair measure of damages in this case.” That language may well mean that the first judge primarily was concerned with the total damages of $1,600,000.00 as the sum that would reflect a just award in light of the defendant’s willfulness and would discourage future infringements.
Accordingly, the Court indicates that on remand plaintiffs should be free to argue to the district court that the statutory damages rate should be increased, subject to the statutory limitation of $150,000.00 per song, in light of the total number of infringing works and the willful conduct of defendant. The $200,000.00 award will serve as a damages floor on remand.
1 Hernandez et al. v. Sonolux Records, 370 F. 3d 183, (2004)
2 Report of the Committee on the Judiciary, H.R. Rep. No. 94-1476 at 162 (1976)
3 996 F. 2d 1366 (2d. Cir. 1993)