Thursday, March 31, 2016

Copyright Law & Live Music: Default Judgments and Unreasonable, Irrational Statutory Damages


If a defendant in a copyright infringement litigation simply defaults by not showing up in court, is the plaintiff limited to recovering minimum statutory damages?

In Broadcast Music, Inc. v. Crocodile Rock Corporation, --- Fed. Appx. ---- (3d Cir. October 30, 2015), the United States Court of Appeals for the Third Circuit said "no".  BMI was permitted to recover a much greater amount than the statutory minimum and to recover significant attorneys fees.

A circuit court of  appeals reviews a U.S. district court's decisions for error.  Where, as here, a statute gives a district judge discretion in making an assessment, an appellate court must find an "abuse of discretion" in order to reverse the lower court's findings.  In this case, BMI scored $7,000 per copyright infringement, plus more than $67,000 in costs and attorneys fees.  BMI discovered that the Crocodile Rock CafĂ© in Allentown PA was having a live music night.  It sent an investigator.  The investigator found one BMI song played at a concert that generated $15,000 in income and four BMI songs played at a concert that generated $180.  BMI tried to get Crocodile Rock to enter into a license agreement, but Crocodile refused.

An entire chapter of my book Copyright Litigation Handbook (Thomson Reuters West 2015-2016) is devoted to the question  of attorneys fees under the Copyright Act.  The reality is that most copyright infringements won't warrant the cost of litigating them, absent the possibility of recovering attorneys fees.  To address this problem and to ensure that authors had robust remedies for redressing injuries to their authorial rights, Congress provided for copyright owners who have timely registered their works with the Copyright Office the option of electing statutory damages.   If a copyright owner elects statutory damages, the owner does not have to prove actual damages to recover.  

Section 504(c) provides that a plaintiff whose works are properly registered may elect an award of statutory damages "in a sum of not less than $750 or more than $30,000".

Instead of awarding $750 per copyright infringement when Crocodile Rock failed to show up in court, the district judge awarded $7,000 per infringement.   For playing five songs, Crocodile Rock was assessed statutory damages totaling $35,000, far more than the two entire concerts had generate.

The Third Circuit found the district judge to be free to assess copyright infringement damages anywhere within the statutory range and that any assessment within the range would essentially be immune from review on appeal.  Thus, just because the infringer did not profit from the copyright infringement, such evidence of a lack of profit would not disturb a district court's determination.  The Third Circuit specifically rejected Crocodile's argument that statutory damages must have some "reasonable rational relation" to the award.

Lesson for copyright owners: register your copyrights regularly, particularly upon publication.  If you do so prior to infringements occurring, you may qualify for statutory damages.   I devote a chapter of Copyright Litigation Handbook (Thomson Reuters West 2015-2016) to handling registration issues with the Copyright Office before you go to court.  Such issues may include correcting, amending, supplementing and expediting copyright registrations.

Lesson for rock star infringers.  If you infringe and don't take the problem seriously it can cost you your entire business.  Waiting until it is too late and then raising a big legal ruckus may make a manageable problem worse.

To read the Third Circuit's opinion, click here.
 Copyright law, fine art and navigating the courts. All practice, no theory.Copyright Litigation Handbook (Thomson Reuters Westlaw 2015-2016) by Raymond J. Dowd
 Copyright Litigation Handbook on Westlaw

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