Sued for Copyright Infringement? Three Questions to Ask Immediately

• Does the Plaintiff Have a Copyright Registration and When Did it Issue?
• When Did the Alleged Infringement Occur?
• Worst Case Scenario, What Kind of Damages Are Reasonably on the Table?

If you do not regularly get angry letters from attorneys, reading one that accuses you of copyright infringement must be a perplexing and anxiety inducing experience.

Can a plaintiff really recover its attorneys’ fees and $150,000 per work that is infringed? Is downloading copyrighted material from the internet for personal use copyright infringement? Are these guys actually going to sue me?

The answers to these three questions are:  sometimes, almost always, and, unfortunately, probably yes.

The Copyright Act

The Copyright Act of 1976 is a powerful and versatile tool that reasonable plaintiffs can use to make themselves whole in a variety of circumstances.

For example, the notice and take-down system created by the Digital Millennium Copyright Act (“DMCA”) is such an effective way to get infringing material removed from the internet that resourceful attorneys across the country frequently re-frame disputes over libel or invasion of privacy as copyright disputes in order to convince an internet service provider (“ISP”) to remove the offending content. Because copyright law attaches to any expressive work that is fixed in a tangible medium, libel, privacy, and other matters frequently do include a copyright angle. Even when they do not, the efficacy of the take-down procedure sometimes proves irresistible to parties who are willing to stretch the truth.

Other provisions in the Copyright Act are even more powerful.

Just as the DMCA’s notice and takedown procedure is routinely abused by individuals and sophisticated corporate entities alike, a certain kind of plaintiffs’ attorney has been champing at the bit to sue you and everyone you care about for that photo you (or an intern in your marketing department) posted on Instagram. There is a cottage industry of copyright attorneys who file hundreds of lawsuits a year using form complaints and send out inflated settlement demands that are aimed at the price point just below the cost of fighting the lawsuit.

To be clear, the Copyright Act is a powerful tool because parties that are being damaged by infringing activity need a powerful tool to curtail the infringing activity and obtain some monetary relief. Revision Legal represents parties on all sides of copyright infringement matters. If you are reading this article, however, you have probably been threatened or sued by an aggressive attorney who is better with a calculator than the written word. When attorneys are not-so-great-at-stringing-words-together and making them sound pretty, they do what illiterate bullies have done throughout history—exaggerate and get louder.

Reading a letter or complaint from one of these attorneys can start your ears ringing.

Without fail, they will inform you—you horrible, soulless infringer—that you will have to pay $150,000 for each of many works infringed and their client’s attorneys’ fees, which, they do not hesitate to mention, will only continue to get higher the longer you drag out the needlessly rushed procedure that the attorney uses to scare defendants, feel competent, and manage the several hundred identical lawsuits they filed that year.

Making sense of threats like those requires more than just knowing the law, it requires some boots on the ground experience. There are at least three things to check for immediately when evaluating a copyright complaint or demand letter from a plaintiff claiming infringement.

Does the Plaintiff Have a Copyright Registration and When Did it Issue?

Until earlier this year, there was a Circuit Split on the issue of whether a plaintiff had to have a federal copyright registration in hand before filing a lawsuit, meaning that some courts required a plaintiff to have a copyright registration first and others did not. In March 2019, the Supreme Court resolved the issue by finding that a plaintiff must have a copyright registration before filing suit. Fourth Estate Pub. Ben. Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881, 886-87 (2019). If an adverse party is threatening you but has not referenced copyright registration numbers in any of its correspondence with you, ask them to provide those numbers to you. They cannot file a lawsuit until the Copyright Office has issued a registration to them for the works at issue.

A related but more complicated inquiry is whether any asserted copyright registrations are valid and whether any valid copyright registrations cover a single work or several works as allowed by the limited types of group registrations processed by the Copyright Office.

Until recently, some group registrations could cover hundreds of individual works. For certain types of group registrations, each individual work covered may give rise to a separate award of statutory damages. Other types of registrations, like a registration for a compilation, are treated as a single work for the purposes of assessing a plaintiff’s damages even though the compilation may comprise multiple parts that could have been registered individually.

When Did the Alleged Infringement Occur?

Another important initial inquiry is whether the plaintiff’s claim is barred by the three-year statute of limitations in the Copyright Act. 17 U.S.C. § 507(b). The three years start to run from the date on which “the claim accrued.”

In New York, the claim accrues when the plaintiff knew or should have known about your allegedly infringing activity. Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120, 125 (2d Cir. 2014). Most courts, however, recognize and apply the separate-accrual rule when considering whether a copyright claim is time barred. In 2014, the Supreme Court wrote “[i]t is widely recognized that the separate-accrual rule attends the copyright statute of limitations.” Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 671 (2014). “Under that rule, when a defendant commits successive violations, the statute of limitations runs separately from each violation.” Id. “Each time an infringing work is reproduced or distributed, the infringer commits a new wrong.” Id. In some circumstances, courts will treat an ongoing act of copyright infringement as a single infringement that does not restart the statute of limitations period under the separate-accrual rule. See Craig v. UMG Recordings, Inc., 380 F. Supp. 3d 324, 336 (S.D.N.Y. 2019) (collecting cases).

Even if a plaintiff’s claims are not barred by the statute of limitations, the damages they may recover will be limited to the three years immediately preceding their lawsuit. Too often plaintiff’s will use spreadsheets reciting decades worth of sales from a defendant or lack of sales from a plaintiff to justify their bad faith settlement demands. Have you made a lot of money from your allegedly infringing acts in the past three years? Has the plaintiff’s business taken a significant hit because of your allegedly infringing activity? If the answer to both questions is “no,” the damages available to the plaintiff may be significantly smaller.

Moreover, with certain exceptions, the Copyright Act does not allow a plaintiff to recover statutory damages or attorneys’ fees if a defendant can show that any infringement began before the Copyright Office issued the relevant registrations. 17 U.S.C. § 412.

Worst Case Scenario, What Kind of Damages Are Reasonably on the Table?

If you received a letter, email, phone call, or complaint from an overzealous copyright attorney, you probably read or heard the phrase “statutory damages” a dozen times. If a prevailing copyright plaintiff is not allowed or does not elect to receive an award of statutory damages, they may recover money to remedy their actual damages as well as any profits derived by the infringer from their infringing activity. If certain preconditions are met, a plaintiff may elect to receive statutory damages instead of submitting evidence to show its damages and defendant’s ill-gotten profits.

Lawsuits are not supposed to end with a windfall for the plaintiff. Statutory damages, though they may sound like a windfall to the plaintiff, serve an important purpose.

The ability to pursue statutory damages ensures that willful bad actors cannot insulate themselves from liability by deliberately concealing the amount of their profits. Because of this rationale, an award of statutory damages that is within the range set by the Copyright Act is often kept as close to the amount the plaintiff would have recovered without electing to receive statutory damages if the defendant can show that they are not hiding their profits.

Courts are given wide latitude in fixing the amount of statutory damages as long as they fall within discrete ranges stated in the Copyright Act for different circumstances. In most cases, when a plaintiff is allowed to seek statutory damages, the court may award not less than $750 or more than $30,000 per work that is infringed. 17 U.S.C. § 504(c)(1). If a court finds that an infringing defendant acted willfully, the court may, in its discretion, increase an award of statutory damages to not more than $150,000. If, on the other hand, the defendant succeeds in showing that it was an “innocent infringer,” the court may exercise its discretion to reduce an award of statutory damages to not less than $200.

Almost invariably, a plaintiff’s reference to statutory damages will occur within twenty words of “$150,000” without acknowledging that the amount is a ceiling and only available against a willful infringer. In some cases, a Court could levy a judgment against an infringer for $150,000 per infringement. In most cases, monetary awards are significantly lower. The $150,000 figure is included as a cap on the statutory damages a court may award when the copyright owner “sustains the burden of proving, and the court finds, that [the] infringement was committed willfully . . . .” 17 U.S.C. § 504(c)(2). Only when dealing with a willful infringer in a case where the plaintiff has elected to recover statutory damages may the “court in its discretion . . . increase the award of statutory damages to a sum of not more than $150,000.” Id.

Unlike statutory damages, which give the court great discretion only within prescribed boundaries, the Copyright Act leaves the issue of attorneys’ fees entirely to the court’s discretion. 17 U.S.C. § 505. Nobody likes a serial copyright plaintiff that tries to extort unreasonable sums from small businesses or individuals, and most courts are reluctant to award attorneys’ fees to such a plaintiff even when the plaintiff wins the lawsuit. You should also note that § 505 of the Copyright Act allows the court to award attorneys’ fees to the prevailing party. If you prevail as a defendant, the court could, but probably would not except in extraordinary circumstances, require the plaintiff to pay your attorneys’ fees.

Conclusion

If a third-party is threatening you with a copyright infringement lawsuit, you should take it seriously.

If the potential plaintiff’s allegations are true, you should expect to pay something to settle the matter, but plaintiff’s settlement demands are often out of touch with reality. Hiring an experienced copyright attorney to cut through a plaintiff’s stubborn recitations of “statutory damages” and “attorneys’ fees” often ends up saving you money. The plaintiff’s lawyers who run copyright lawsuit mills often work on a contingency fee basis, collecting a portion of any damages or settlement amount they obtain for their clients. It is important to vigorously defend against such claims from the outset.