Can I use that? – Protecting your business from copyright litigation

The Internet is filled with readily accessible and downloadable images and written content. A common misconception exists that the public nature of this information makes it fair game for reproduction and use. If you or your employees hold this belief, you may wind up being the target of a copyright infringement lawsuit.

In order to prove copyright infringement, a plaintiff must show two things: (1) the plaintiff owns a valid copyright, and (2) the defendant has copied elements of the work that are original. Thus, if Acme Inc. has a valid copyright in content on its website, or that some third party has placed on the Internet and an employee of your company downloads that content and uses it in, for example, advertising materials, your company is at risk for being sued and potentially held liable for damages.

The damages for copyright infringement can greatly exceed what the average person might expect. In general, one who infringes on another’s copyright is liable for either 1) the plaintiff’s actual damages plus any additional profits of the infringer, or 2) statutory damages. See 17 U.S.C. § 504(a). A copyright plaintiff seeking to recover the defendant’s profits establishes the initial case for damages by showing gross revenue. The defendant can then attempt to reduce this number by proving deductible expenses and showing that some of the profit was attributable to factors other than the plaintiff’s copyrighted work. See 17 U.S.C. § 504(b). If a defendant cannot make either showing, a defendant’s gross revenue stands as the damages.

This damages paradigm can result in unexpectedly high damages claims. For example, if a plaintiff claims that a defendant took copyrighted material and used it in a book, the plaintiff would like to begin by claiming all profits from the sale of the book; if a plaintiff claims that a defendant infringed on a home design, the plaintiff would likely begin by claiming all profits from the sale of homes based on that design; if a plaintiff claims that a defendant infringed on a copyright of a song, the plaintiff would likely begin by claiming all profits derived from that song. A defendant could certainly have the opportunity to reduce these claimed expenses, but the initial damages figures claimed by a plaintiff can be staggering.

Even if there are little to no actual damages, a copyright holder may elect to recover an award of statutory damages of $750 to $30,000 per infringed work. 17 U.S.C. 504(c)(1). The amount of the award within this range is determined based on “what the court considers just.” Id. Courts take the approach that statutory damages are meant to both compensate plaintiffs and deter others from infringing on copyrights under the theory that infringing and being caught should be more expensive than paying licensing fees or otherwise taking appropriate steps to use another’s copyrighted material. See, e.g., Unicity Music, Inc. v. Omni Commc'ns, Inc., 844 F. Supp. 504, 510 (E.D. Ark. 1994). In other words, even if your company infringes on another’s copyright in what seems like it caused no true harm to the copyright holder, a plaintiff can still bring a suit, win, and collect damages. Some plaintiffs bring these suits even when there have been no provable damages not only because of the statutory damages option but also because the Copyright Act allows the prevailing party to recover its attorney’s fees. See 17 U.S.C. § 505. There is a strong presumption that a court will award fees to the prevailing party. See, e.g., Hunn v. Dan Wilson Homes, Inc., 789 F.3d 573, 588-89 (5th Cir. 2015). Attorney’s fees and litigation costs in copyright litigation can be extensive, as the litigation is often complex even when damages are limited, and expert testimony is often (but not always) necessary for both parties.

If you receive a cease and desist letter accusing you or your company of copyright infringement, the letter, and threat of litigation must be taken seriously, and you should strongly consider contacting an attorney familiar with copyright litigation promptly to determine the validity of the claim, the potential exposure, and what steps can be taken to mitigate any harm that has already occurred.

Of course, your ultimate goal should be to avoid ever being accused of copyright infringement. You can take steps to protect yourself or your company from copyright litigation, including training employees who are responsible for creating content and developing internal policies and procedures to avoid infringing action. Speaking with an attorney who has litigated copyright disputes can help manage the risk of expensive and time-consuming litigation and potential exposure.

For questions contact the author, William A. Ramsey at war@barrettlaw.com or a member of Barrett McNagny's Intellectual Property Group.