Is Copyright Infringement Dischargeable in Bankruptcy?

In Re Therese Pearman, 432 B.R. 495 (D. New Jersey June 23, 2010) struggled with precisely this issue.  Ms. Pearman wrote a poem grieving her grandparents' death.  It was entered in a national competition and won. Then her poem was published in "Chicken Soup for the Christian Soul". She complained and was paid a $500 licensing fee. Years later she found out that someone else was using her poem. She sued for copyright infringement.

But it turns out that someone else wrote the poem in the 1960s.  The accused infringer turned around and sued her demanding sanctions. She declared bankruptcy. In analyzing whether the claims against her were dischargeable in bankruptcy the court analyzed first whether or not her actions were willful. The court concluded that they were.

But the court then went on to the second portion of its analysis in determining whether the alleged debt qualified as an exception to discharge in bankruptcy. To qualify for the exception the injury must also be "malicious".  The court found that the injury was not malicious and thus did not qualify as an exception to discharge in bankruptcy under Section 523(a) (6) of the Bankruptcy Code.

So the answer is "sometimes" and a higher "malice" standard must be satisfied.  See In re Barboza, 545 F.3d 702 (9th Cir. 2008).

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