Under the US Copyright Act of 1976, 17 USC § 101 et seq., there are two categories of damages that can be collected to punish music piracy. “Piracy” is known legally as “infringement.” The two categories of damages are:
- The copyright owner’s “actual damages and any additional profits of the infringer…” (Section 504(a)(1)) or
- An “award of statutory damages” from $750 to $30,000 per infringement (Section 504(c)).
In the case of “willful” piracy/infringement, the court can increase the amount of statutory damages to up to $150,000 per infringement. Note that the two categories are separate and that the copyright owner must make a choice between the two.
Sometimes there is confusion about why there are two categories. The answer is twofold — to adequately incentivize copyright owners to protect their copyrights and to prevent piracy by making piracy potentially very expensive.
An example demonstrates the difference between the two categories and why Congress provided the options. Let us assume, hypothetically, that a college student pirates several of songs written and performed by your band. You and the band still own the copyrights and the copyrights have been registered. Now let us assume you and the band file a lawsuit to collect your damages and punish the defendant. In legal terms, the “defendant” is the infringer (in our example, the college student engaging in music piracy). Generally, an online purchase of music costs about a dollar or maybe $1.50 per song. Let’s also assume that you the whole purchase price as the band’s actual damages. Assume, finally, that the student did not sell the pirated songs and the student made no profits that can be recovered.
In our example, if four songs were pirated, the actual damages would total to about $6.00. That is not very much money and there is very little incentive to sue the infringer. However, if statutory damages are selected, then the court might award $750-$30,000 per illegal download. Now the damages are $3,000 at minimum and could be as high as $120,000. The potential for statutory damages makes it worth the time and expense to file infringement lawsuits.
From the other side, consider the potential costs to the infringer. If actual damages were the only possible recovery, then about $6.00 would be the maximum amount that the infringer might have to pay in damages. That is not too much risk. Likely, persons engaging in piracy would take that risk. If you get away with the piracy, the cost is $0; if you are sued, you might have to pay about $6.00 (which is about what the pirates would have paid if they had bought the songs). That incentive structure encourages piracy. However, since statutory damages are available, the downside risk to the infringer is much greater. If the infringer is sued, the potential damages are $3,000 to $120,000 with the possibility of $600,000 being awarded if the piracy is deemed “willful.” The potential for statutory damages makes it very costly for the infringer and serves as a true deterrent. On the cost-benefit balance, it is better to buy the songs.
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For more information, contact the business, entertainment and IP lawyers at Cordero Law. Our approach is to provide top-tier legal services by working with our clients rather than simply working for them. Our entertainment law practice focuses on the music industry. Having a good music lawyer is essential for the success of new and established artists. Contact us via our online Contact Page or by calling (212) 960-8890.