Copyright News: Court Decision May Change The Way People Seek Damages...
 

COURT EXCLUDES MULTIPLIER FROM COPYRIGHT INFRINGEMENT DAMAGES

Some people in the graphic arts and photography industry believe that it is appropriate in determining damages for infringement of copyrighted work, to multiply the actual damages by up to ten times. While this may be an accepted practice in negotiating settlements, a court has now, in no uncertain terms, held that there is no such provision for multipliers in the Copyright Act.

The case is Michiko Stehrenberger v. R.J. Reynolds Tobacco Holdings, Inc. et al, brought in the United States District Court for the Southern District of New York. The decision came about on a motion to preclude the plaintiff from claiming, as part of her actual damages, a multiplier to increase damages by up to ten times. District Court Judge Stanton, in an opinion filed September 15, 2004, ruled against the plaintiff and precluded such evidence after a thorough discussion of the issues.

The plaintiff's expert, a prominent photographer, claimed that for a company with the annual revenues of an R.J. Reynolds, that the reasonable license fees for the infringements appearing in newspaper advertisements, consisted of $10,000 for a corporate ad, and $50,000 for a limited corporate identity project. He concluded that "a total licensing fee of $60,000 is thus appropriate in this case."

On top of this, the expert wanted to add a multiplier for unauthorized usage, because, he claimed, the graphic arts community (which obviously includes photography) recognizes that mistakes do occur resulting in unauthorized use, and to resolve these problems, the industry has a schedule of fees for the granting of a retroactive license. The reason such a multiplier is used, according to the expert, is to avoid the costly and protracted business of a federal copyright case. He claimed that when the case is settled without litigation, the multiplier is between two to three times the normal fee, but if the parties go to court, the multiplier goes up to ten times what the pre-infringement price would have been.

The Court recognized that such a formula may have some utility as a marketplace technique for resolving problems in the industry, but rejected its place in calculation of damages under the copyright law. In short, the Court said, "in litigated cases, infringement does not make a copyright more valuable."

On the other hand, multipliers can, in fact, be used, but only as an enhancement of statutory damages, which this plaintiff was apparently not eligible for.

Accordingly, the Court said that plaintiff can pursue her actual damages, which is measured by the extent to which the market value of the copyrighted work, at the time of the infringement, had been injured or destroyed by the infringement. In appropriate circumstances, actual damages may be equal to the reasonable license fee that would have been charged for such use. (Disgorgement of profits is also an available remedy, but that apparently was not raised in this case.)

The Court concluded that, since the expert determined actual damages at $60,000, any multiplier would constitute a penalty and was therefore not available. The case will now proceed to trial with the plaintiff having to prove her damages, which cannot exceed $60,000.

In the photography industry, multipliers have traditionally been used in contracts to value loss of images, or use without consent or use beyond the terms of the license granted. These clauses, which fall under the heading of liquidated damages under contract law, can be enforceable under certain circumstances. They therefore still have practical use in the industry. However, you must be careful how you structure your remedies and contract terms, so that you can maximize the potential and actual value of your property.

Source: www.photosource.com