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Copyright Trademarks

Must Show Massive Distribution For Statutory Damages Of More Than $1 Million In Copyright And Trademark Cases

The Copyright Act allows the owner of an infringed copyright to recover statutory damages, when there is an innocent infringement, in a sum of between $750 and $30,000. When the infringement is willful, the statutory damages can reach as high as $150,000 per infringement.

The Lanham Act allows the owner of an infringed trademark registration in a case involving the use of a counterfeit mark to recover statutory damages of between $1,000 and $200,000 for innocent violations. The enhanced amount can reach as high as $2 million per infringement when it is willful.

Does proving willfulness on the part of the defendant always mean that courts will feel comfortable with assessing damages in an amount near the limits as provided by statute? Absolutely not, as highlighted by a recent decision by the U.S. District Court for the District of New Jersey in the case of Cengage Learning, Inc. et al. v. Appalacian Inc., et al. It is up to the court’s discretion as to what the award should be.

In Cengage Learning, the plaintiff sought $1 million in total statutory damages for their copyright and trademark infringement claims. The court came to the conclusion that the amount of damages should be much lower based on a review of multiple factors:

(1) the expenses saved and the profits reaped;

(2) the revenues lost by the plaintiff;

(3) the value of the copyright [or trademark];

(4) the deterrent effect on others besides the defendant;

(5) whether the defendant’s conduct was innocent or willful;

(6) whether a defendant has cooperated in providing particular records from which to assess the value of the infringing material produced; and

(7) the potential for discouraging the defendant.

Noting that these factors can be difficult to monetize, the court acknowledged that the defendant’s intent and behavior must be the foremost consideration. The court found willful activity but awarded statutory damages at $120,000 (representing $10,000 for each infringed copyright and trademark) as opposed to the $1 million requested by the plaintiffs. A footnote in the opinion provides some insight into how the court came to its conclusion.

This sum reflects the sale of 1,267 counterfeit Books to the U.S. Defendants. Awards of statutory damages of $1,000,000 or greater typically involve a much wider distribution of counterfeit goods, such as sale to the general public through the internet.