Wednesday, April 28, 2010

2d Cir: Statutory Damages - Rejects "Independent Economic Value" Test

In Bryant v. Media Right Productions, Inc., --- F.3d ---, 2010 WL 1659113 (2d Cir. April 27, 2010), the Second Circuit considered the question of how many statutory damages awards may be granted for an infringement of an album comprised of ten songs.

The court made clear that if the copyright owner published a work as a "compilation" - or album, only one award would be available under 17 USC 504(c).

If a defendant took ten songs from ten different albums and published them as one compilation, ten awards would be available because the copyright owner had not published the works as a compilation.

The decision was written by Judge Kimba Wood sitting by designation.  It relied on plain language and legislative history arguments regarding Congress's limitation on the number of awards of statutory damages in enacting the Copyright Act.

Bryant explicitly rejected the "independent economic value" test adopted by the 9th, 11th and DC Circuits in determining whether copyrighted works within a compilation could support additional awards of statutory damages.   The other Circuits have not explicitly dealt with the question of songs and albums but television shows (9th and 11th) and individual poses of Mickey Mouse (D.C. Cir.).


Andrew Berger said...

Raymond, there seems to be a bit of unfairness in this result. Copyright law is designed to stimulate creation by protecting the creators. But the last sentence of 17 U.S.C. § 504 (c)(1), which Bryant construed, appears to do the opposite. The one-work limitation, instead of stimulating creation, shelters infringement. That is because it shields infringers from multiple awards of statutory damages no matter how many works they infringe simply because the copyright owner issued the works collectively. Now that digital technology enables infringers to break apart albums into individually infringed songs, as in Bryant, one wonders about the continuing justification for the one-work limitation.

But absent a legislative change, this limitation is now well respected in the Second Circuit.

Ray Dowd said...

Andy: I think that the general sentiment among the federal judges who administer the statutory damages regime is that damages these days are too high on the maximum end, rather than too low. Even within the statutory damages range available, courts still don't generally award the maximum. So theoretically, your argument makes sense, as a practical matter though, there is always the option of opting for actual damages where a single infringement was particularly lucrative.


Jonathan Beattie said...

Ray: this is assuming of course that you can prove actual damages. In this particular case, the sales records were claimed to be lost in a flood by the Defendant(s). According to the briefs submitted, there were at least 6,000 downloads of these songs that the Plaintiffs could discern through discovery. However, the Defendant only claimed approximately $300 in "profits." There is obviously some kind of disconnect here and probably one of the reasons that the Plaintiffs chose damages --- because they were unable to prove actual damages. The Plaintiffs testified that they sold 10,000 copies of the musical recordings so it is hard to see how the defendants here had only $300 in profits.

The one work limitation here serves only one purpose and that is, in a sense, to punish copyright owners for not issuing their works as separate individual "works."

Ray Dowd said...

Jonathan: You make an excellent point, although calling it punitive might be a bit of an overstatement. I have been concerned lately with abuses at the other end - damages claims that appear to me to be ridiculously punitive. But you are correct that in certain cases, particularly where there has been this type of active wrongdoing and spoliation, opting for actual damages may not be a particularly satisfying remedy.