Globalized Punitive Damages
If a person is injured by a defective product or in an accident caused by negligence, that person has several remedies available to him in a court of law. Barring extraordinary circumstances, if the person can prove that the defective product caused his injuries, he will receive actual damages from the maker of the product, or whoever is responsible for putting that product into the stream of commerce. The actual damages the injured party receives will typically cover any bills resulting from treating the injury, i.e. hospital and doctor’s bills, as well as any money lost as a result of missing work, etc. Essentially, the actual damages help to make the plaintiff whole again, or as they were before the incident causing the injury occurred.
In addition, the plaintiff may receive punitive damages. Punitive damages exist as a possible remedy for several reasons. The foremost reason is to set an example for other producers. If the injury was a result of negligence, or if the producer knew injuries might be likely to occur and did not warn consumers, punitive damages are an extra deterrent against that kind of behavior. They encourage producers to be vigilant with safety measures.
In Davis v. The Gap, Inc., the district court held, and the 2nd Circuit affirmed, that Davis was not entitled to punitive damages under the Copyright Act.[1] The court noted that “[a]s a general rule, punitive damages are not awarded in a statutory copyright infringement action,” primarily because the purpose of punitive damages is achieved in other ways through the Copyright Act.[2] § 504(c)(2) allows an award of statutory damages to be increased when there is willful infringement involved, thus serving the goal of preventing purposeful and malicious infringement.[3] The copyright owner must elect to receive the statutory damages, but can do so anytime before the final judgment is issued.[4] The actual statutory damage amount received, however, can range from a lowly $200 to an unlikely $150,000.[5]
After Davis, however, several decisions in the Southern District of New York allowed punitive damage claims to proceed.[6] The language in the Copyright Act is clear as to what damages can be obtained as a result of a person’s copyright being infringed, and those remedies do not include punitive damages, so it is interesting that the courts came to these conclusions in certain cases.[7] In TVT Records. v. Island Def Jam Music Group, Judge Marrero held that that plaintiffs there could indeed seek punitive damages, and he gave two reasons for holding so.[8] First, for one infringement action the plaintiffs were seeking actual damages over statutory damages, and second, for another infringement action the plaintiffs could not seek statutory damages at all.[9] “The impact of the TVT Records decision was mitigated, however, when the plaintiffs later elected to recover statutory damages (presumably to avoid an appeal of the judgment).”[10] Later, in two separate decisions, Judge Louis L. Stanton refused to dismiss claims for punitive damages, and allowed the plaintiffs to amend the complaints to include a prayer for such damages.[11] In Blanch v. Koons Judge Stanton stated that, “‘[u]ltimately, the determination whether punitive damages are available for copyright infringement cases must be made in a case where the issue is squarely presented: where the jury could find malice or willful infringement, and the plaintiff is not seeking (or is barred from obtaining) statutory damages.’” However, he also admitted that he was simply allowing the argument to be heard on its facts, and did not anticipate the plaintiff winning those damages.[12]Not all Southern District judges follow this line of reasoning, including Judge William H. Pauley III, who has held that punitive damages are “categorically unavailable” in copyright actions.[13] In addition, it is likely that most courts in the United States hold that punitive damages are unavailable. However, there is clearly a confusion on the part of at least some judges whether or not punitive damages should, at the least, be an option to include in a prayer for remedies. Confusion in the courts can only lead to confusion on the part of many plaintiffs looking for relief. Should punitive damages be available in certain circumstances? What would those circumstances have to be to include them? Should a willful and malicious infringement of a copyright, particularly one that violates moral rights, be considered a case that deserves a punitive damage award? Some foreign governments have implemented the idea or at least toyed around with it in decisions.
In Canada, the government recently passed a copyright reform bill, C-61, designed to “‘balance the interests of Canadians who use digital technology and those who create content.’”[14] The bill caps statutory damages at $500 (Canadian) for those who download infringing content.[15] However, users who upload or post infringing content on the internet are still liable for up to $20,000 (Canadian) statutory damages.[16] “In addition, judges have discretion to impose punitive damages in all cases.”[17]
Many lawyers will not take copyright cases on a contingent fee basis, since large punitive damage awards are not likely.[18] However, this summer in the UK, a “no win, no fee” team of lawyers took on a copyright case for videogames producer Topware Ineractive.[19] The producer sued several individual users of a copyrighted pinball game, which sold on Amazon.com, for illegally sharing the game.[20] Though the game costs only £8.99, the damages imposed per individual user were well over £2,000 when adding in legal costs.[21] “The level of damages indicates UK judges are sympathetic to the view that copyright infringment via peer to peer networks can cause greater damage to rights holders than the retail cost of their product, because the number of times it has been shared by an individual is unknown.”[22]
In India, punitive damage awards are seen as an effective tool used to prevent rampant copyright infringement.[23] The Indian Performing Rights Society is a copyright society, which has the exclusive ownership of the public performance rights of some literary and musical works in
India.[24] They have a fixed tariff structure, which seems reminiscent of ASCAP.[25] In Indian Performing Right Society Ltd. v. Debashis Patnaik & Ors 2007 (34) PTC 201 (Del.), IPRC sued Debashis for playing a copyrighted work owned by IPRS in a hotel.[26] Since Debashis continued infringing the copyright, even after being notified by IPRS through a request for licensing fees as well as through this suit, the court held that IPRS was entitled to both compensatory and punitive damages.[27] “The stance of the copyright societies in India is laudable taking into consideration the difficulty in containing copyright infringement. Currently, there has been a tremendous transformation in judicial attitude in awarding punitive damages. Judicial precedents . . . have fueled punitive damages as an effective tool in containing infringement.”[28]
Some commentators in the U.S. who argue to keep the system the way it is do so because they claim it encourages owners to register their works.[29] If the copyright owner does not register his work, he cannot claim statutory damages.[30] If the court allowed the non-registered copyright’s owner to sue for actual and punitive damages, because he could not recover statutory damages, that would be against the legislative purpose of encouraging registration.[31] “In fact, it would create an incentive not to timely register one’ [sic] copyright in order to make oneself eligible to recover punitive damages without a cap — exactly the opposite of what Congress intended.”[32] Registration, of course, provides notice of the owner’s rights, which is considered to be beneficial.[33] Luckily for these commentators, the judge in a recent high profile copyright case, Viacom v. YouTube, ruled that Viacom cannot seek punitive damages against YouTube, only statutory damages if Viacom so chooses.[34]
The method followed in the U.S. makes sense, especially to promote the legislative ends Congress wishes to. However, the globalization of technology and the increase of technological copyright issues could lead to a fair amount of forum shopping on plaintiffs’ part in the future. Countries that allow punitive damages and are either close to the U.S., like Canada, or producing a high amount of technology, like
India, could be ideal forums for copyright owners if possible to bring a lawsuit there.
[1]
Davis v. The Gap, Inc., 246 F.3d 152 (2nd Cir. 2001); Davis I, 1999 WL 199005, at *8.
[2]
Davis v. The Gap, Inc., 246 F.3d 152 (2nd Cir. 2001).
[3]
Id.
[4] Copyright Act, § 504(c).
[5]
Id.
[6] Davis & Gilbert LLP, Are Punitive Damages Available Under the Copyright Act, available at http://library.findlaw.com/2005/Feb/10/172826.html (last visited Nov. 21, 2008).
[7]
Id.
[8]
Id.; 262 F. Supp. 2d 185 (S.D.N.Y. 2003).
[9] Are Punitive Damages Available Under the Copyright Act, supra note 6.
[10]
Id.
[11]
Id.
[12]
Id.
[13]
Id.
[14] Nate Anderson, “Canadian DMCA” Brings “Balanced” Copyright to
Canada, June 12, 2008, available at http://arstechnica.com/news.ars/post/20080612-canadian-dmca-brings-balanced-copyright-to-canada.html (quoting Canada Industry Minister Jim Prentice).
[15]
Id.
[16]
Id.
[17]
Id.
[18] Cindy Hill, Copyright and Moral Rights Enforcement, available at https://www.fineartregistry.com/articles/hill_cindy/copyright_moralrights_enforcement_08-18-2006.php (last visited Nov. 21, 2008).
[19] Chris Williams, Court Slaps UK BitTorrenters with Landmark Damages Award: Copyright Ambulance Chasers Open Up New Market, July 2, 2008, The Register, available at http://www.theregister.co.uk/2008/07/02/davenport_lyons_dream_pinball_win/.
[20]
Id.
[21]
Id.
[22]
Id.
[23] Manisha Singh Nair, Punitive Damages: Effective Tool to Contain Infringement, April 24, 2007, available at http://www.ipfrontline.com/depts/article.asp?id=14868&deptid=7.
[24]
Id.
[25] See id.
[26]
Id.
[27]
Id.
[28]
Id.
[29] Are Punitive Damages Available Under the Copyright Act, supra note 6.
[30] See id.
[31]
Id.
[32]
Id.
[33]
Id.
[34] Nate Anderson, Judge to Viacom: No Punitive Damages in YouTube Case, March 11, 2008, available at http://arstechnica.com/news.ars/post/20080311-judge-to-viacom-no-punitive-damages-in-youtube-case.html.