17 U.S.C. § 504 — Remedies for infringement: Damages and

Page 169 TITLE 17—COPYRIGHTS § 504 been impounded. The protective order shall pro- vide for appropriate procedures to ensure that confidential, private, proprietary, or privileged information contained in such records is not im- properly disclosed or used. (3) The relevant provisions of paragraphs (2) through (11) of section 34(d) of the Trademark Act (15 U.S.C. 1116(d)(2) through (11)) shall ex- tend to any impoundment of records ordered under paragraph (1)(C) that is based upon an ex parte application, notwithstanding the provi- sions of rule 65 of the Federal Rules of Civil Pro- cedure. Any references in paragraphs (2) through (11) of section 34(d) of the Trademark Act to sec- tion 32 of such Act shall be read as references to section 501 of this title, and references to use of a counterfeit mark in connection with the sale, offering for sale, or distribution of goods or serv- ices shall be read as references to infringement of a copyright. (b) As part of a final judgment or decree, the court may order the destruction or other reason- able disposition of all copies or phonorecords found to have been made or used in violation of the copyright owner’s exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced. (Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2585; Pub. L. 110–403, title I, § 102(a), Oct. 13, 2008, 122 Stat. 4258; Pub. L. 111–295, § 6(d), Dec. 9, 2010, 124 Stat. 3181.) HISTORICAL AND REVISION NOTES HOUSE REPORT NO. 94–1476 The two subsections of section 503 deal respectively with the courts’ power to impound allegedly infringing articles during the time an action is pending, and to order the destruction or other disposition of articles found to be infringing. In both cases the articles af- fected include ‘‘all copies or phonorecords’’ which are claimed or found ‘‘to have been made or used in viola- tion of the copyright owner’s exclusive rights,’’ and also ‘‘all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies of phonorecords may be reproduced.’’ The alter- native phrase ‘‘made or used’’ in both subsections en- ables a court to deal as it sees fit with articles which, though reproduced and acquired lawfully, have been used for infringing purposes such as rentals, perform- ances, and displays. Articles may be impounded under subsection (a) ‘‘at any time while an action under this title is pending,’’ thus permitting seizures of articles alleged to be in- fringing as soon as suit has been filed and without waiting for an injunction. The same subsection empow- ers the court to order impounding ‘‘on such terms as it may deem reasonable.’’ The present Supreme Court rules with respect to seizure and impounding were issued even though there is no specific provision au- thorizing them in the copyright statute, and there ap- pears no need for including a special provision on the point in the bill. Under section 101(d) of the present statute [section 101(d) of former title 17], articles found to be infringing may be ordered to be delivered up for destruction. Sec- tion 503(b) of the bill would make this provision more flexible by giving the court discretion to order ‘‘de- struction or other reasonable disposition’’ of the arti- cles found to be infringing. Thus, as part of its final judgment or decree, the court could order the infring- ing articles sold, delivered to the plaintiff, or disposed of in some other way that would avoid needless waste and best serve the ends of justice. Editorial Notes REFERENCES IN TEXT The Trademark Act, referred to in subsec. (a)(3), probably means the Trademark Act of 1946, act July 5, 1946, ch. 540, 60 Stat. 427, also popularly known as the Lanham Act, which is classified generally to chapter 22 of Title 15, Commerce and Trade. Section 32 of the Act is classified to section 1114 of Title 15. For complete classification of this Act to the Code, see Short Title note set out under section 1051 of Title 15 and Tables. The Federal Rules of Civil Procedure, referred to in subsec. (a)(3), are set out in the Appendix to Title 28, Judiciary and Judicial Procedure. AMENDMENTS 2010—Subsec. (a)(1)(B). Pub. L. 111–295 substituted ‘‘copies or phonorecords’’ for ‘‘copies of phonorecords’’. 2008—Subsec. (a). Pub. L. 110–403 amended subsec. (a) generally. Prior to amendment, subsec. (a) read as fol- lows: ‘‘At any time while an action under this title is pending, the court may order the impounding, on such terms as it may deem reasonable, of all copies or phonorecords claimed to have been made or used in vio- lation of the copyright owner’s exclusive rights, and of all plates, molds, matrices, masters, tapes, film nega- tives, or other articles by means of which such copies or phonorecords may be reproduced.’’ § 504. Remedies for infringement: Damages and profits (a) IN GENERAL.—Except as otherwise provided by this title, an infringer of copyright is liable for either— (1) the copyright owner’s actual damages and any additional profits of the infringer, as provided by subsection (b); or (2) statutory damages, as provided by sub- section (c). (b) ACTUAL DAMAGES AND PROFITS.—The copy- right owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the ac- tual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross rev- enue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work. (c) STATUTORY DAMAGES.— (1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all in- fringements involved in the action, with re- spect to any one work, for which any one in- fringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work con- stitute one work. (2) In a case where the copyright owner sus- tains the burden of proving, and the court finds, that infringement was committed will- fully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the in- Page 170 TITLE 17—COPYRIGHTS § 504 fringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200. The court shall remit statutory damages in any case where an infringer be- lieved and had reasonable grounds for believ- ing that his or her use of the copyrighted work was a fair use under section 107, if the in- fringer was: (i) an employee or agent of a non- profit educational institution, library, or ar- chives acting within the scope of his or her employment who, or such institution, library, or archives itself, which infringed by reproduc- ing the work in copies or phonorecords; or (ii) a public broadcasting entity which or a person who, as a regular part of the nonprofit activi- ties of a public broadcasting entity (as defined in section 118(f)) infringed by performing a published nondramatic literary work or by re- producing a transmission program embodying a performance of such a work. (3)(A) In a case of infringement, it shall be a rebuttable presumption that the infringement was committed willfully for purposes of deter- mining relief if the violator, or a person acting in concert with the violator, knowingly pro- vided or knowingly caused to be provided ma- terially false contact information to a domain name registrar, domain name registry, or other domain name registration authority in registering, maintaining, or renewing a do- main name used in connection with the in- fringement. (B) Nothing in this paragraph limits what may be considered willful infringement under this subsection. (C) For purposes of this paragraph, the term ‘‘domain name’’ has the meaning given that term in section 45 of the Act entitled ‘‘An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conven- tions, and for other purposes’’ approved July 5, 1946 (commonly referred to as the ‘‘Trademark Act of 1946’’; 15 U.S.C. 1127). (d) ADDITIONAL DAMAGES IN CERTAIN CASES.— In any case in which the court finds that a de- fendant proprietor of an establishment who claims as a defense that its activities were ex- empt under section 110(5) did not have reason- able grounds to believe that its use of a copy- righted work was exempt under such section, the plaintiff shall be entitled to, in addition to any award of damages under this section, an ad- ditional award of two times the amount of the license fee that the proprietor of the establish- ment concerned should have paid the plaintiff for such use during the preceding period of up to 3 years. (Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2585; Pub. L. 100–568, § 10(b), Oct. 31, 1988, 102 Stat. 2860; Pub. L. 105–80, § 12(a)(13), Nov. 13, 1997, 111 Stat. 1535; Pub. L. 105–298, title II, § 204, Oct. 27, 1998, 112 Stat. 2833; Pub. L. 106–160, § 2, Dec. 9, 1999, 113 Stat. 1774; Pub. L. 108–482, title II, § 203, Dec. 23, 2004, 118 Stat. 3916; Pub. L. 111–295, § 6(f)(2), Dec. 9, 2010, 124 Stat. 3181.) HISTORICAL AND REVISION NOTES HOUSE REPORT NO. 94–1476 In General. A cornerstone of the remedies sections and of the bill as a whole is section 504, the provision dealing with recovery of actual damages, profits, and statutory damages. The two basic aims of this section are reciprocal and correlative: (1) to give the courts specific unambiguous directions concerning monetary awards, thus avoiding the confusion and uncertainty that have marked the present law on the subject, and, at the same time, (2) to provide the courts with reason- able latitude to adjust recovery to the circumstances of the case, thus avoiding some of the artificial or overly technical awards resulting from the language of the ex- isting statute. Subsection (a) lays the groundwork for the more de- tailed provisions of the section by establishing the li- ability of a copyright infringer for either ‘‘the copy- right owner’s actual damages and any additional prof- its of the infringer,’’ or statutory damages. Recovery of actual damages and profits under section 504(b) or of statutory damages under section 504(c) is alternative and for the copyright owner to elect; as under the present law, the plaintiff in an infringement suit is not obliged to submit proof of damages and profits and may choose to rely on the provision for minimum statutory damages. However, there is nothing in section 504 to prevent a court from taking account of evidence con- cerning actual damages and profits in making an award of statutory damages within the range set out in sub- section (c). Actual Damages and Profits. In allowing the plaintiff to recover ‘‘the actual damages suffered by him or her as a result of the infringement,’’ plus any of the in- fringer’s profits ‘‘that are attributable to the infringe- ment and are not taken into account in computing the actual damages,’’ section 504(b) recognizes the different purposes served by awards of damages and profits. Damages are awarded to compensate the copyright owner for losses from the infringement, and profits are awarded to prevent the infringer from unfairly bene- fiting from a wrongful act. Where the defendant’s prof- its are nothing more than a measure of the damages suffered by the copyright owner, it would be inappro- priate to award damages and profits cumulatively, since in effect they amount to the same thing. How- ever, in cases where the copyright owner has suffered damages not reflected in the infringer’s profits, or where there have been profits attributable to the copy- righted work but not used as a measure of damages, subsection (b) authorizes the award of both. The language of the subsection makes clear that only those profits ‘‘attributable to the infringement’’ are re- coverable; where some of the defendant’s profits result from the infringement and other profits are caused by different factors, it will be necessary for the court to make an apportionment. However, the burden of proof is on the defendant in these cases; in establishing prof- its the plaintiff need prove only ‘‘the infringer’s gross revenue,’’ and the defendant must prove not only ‘‘his or her deductible expenses’’ but also ‘‘the element of profit attributable to factors other than the copy- righted work.’’ Statutory Damages. Subsection (c) of section 504 makes clear that the plaintiff’s election to recover statutory damages may take place at any time during the trial before the court has rendered its final judg- ment. The remainder of clause (1) of the subsection rep- resents a statement of the general rates applicable to awards of statutory damages. Its principal provisions may be summarized as follows: 1. As a general rule, where the plaintiff elects to re- cover statutory damages, the court is obliged to award between $250 and $10,000. It can exercise discre- tion in awarding an amount within that range but, unless one of the exceptions provided by clause (2) is applicable, it cannot make an award of less than $250 or of more than $10,000 if the copyright owner has chosen recovery under section 504(c). Page 171 TITLE 17—COPYRIGHTS § 506 2. Although, as explained below, an award of min- imum statutory damages may be multiplied if sepa- rate works and separately liable infringers are in- volved in the suit, a single award in the $250 to $10,000 range is to be made ‘‘for all infringements involved in the action.’’ A single infringer of a single work is lia- ble for a single amount between $250 and $10,000, no matter how many acts of infringement are involved in the action and regardless of whether the acts were separate, isolated, or occurred in a related series. 3. Where the suit involves infringement of more than one separate and independent work, minimum statutory damages for each work must be awarded. For example, if one defendant has infringed three copyrighted works, the copyright owner is entitled to statutory damages of at least $750 and may be award- ed up to $30,000. Subsection (c)(1) makes clear, how- ever, that, although they are regarded as independent works for other purposes, ‘‘all the parts of a compila- tion or derivative work constitute one work’’ for this purpose. Moreover, although the minimum and max- imum amounts are to be multiplied where multiple ‘‘works’’ are involved in the suit, the same is not true with respect to multiple copyrights, multiple owners, multiple exclusive rights, or multiple registrations. This point is especially important since, under a scheme of divisible copyright, it is possible to have the rights of a number of owners of separate ‘‘copy- rights’’ in a single ‘‘work’’ infringed by one act of a defendant. 4. Where the infringements of one work were com- mitted by a single infringer acting individually, a single award of statutory damages would be made. Similarly, where the work was infringed by two or more joint tortfeasors, the bill would make them jointly and severally liable for an amount in the $250 to $10,000 range. However, where separate infringe- ments for which two or more defendants are not jointly liable are joined in the same action, separate awards of statutory damages would be appropriate. Clause (2) of section 504(c) provides for exceptional cases in which the maximum award of statutory dam- ages could be raised from $10,000 to $50,000, and in which the minimum recovery could be reduced from $250 to $100. The basic principle underlying this provision is that the courts should be given discretion to increase statutory damages in cases of willful infringement and to lower the minimum where the infringer is innocent. The language of the clause makes clear that in these situations the burden of proving willfulness rests on the copyright owner and that of proving innocence rests on the infringer, and that the court must make a finding of either willfulness or innocence in order to award the exceptional amounts. The ‘‘innocent infringer’’ provision of section 504(c)(2) has been the subject of extensive discussion. The excep- tion, which would allow reduction of minimum statu- tory damages to $100 where the infringer ‘‘was not aware and had no reason to believe that his or her acts constituted an infringement of copyright,’’ is sufficient to protect against unwarranted liability in cases of oc- casional or isolated innocent infringement, and it of- fers adequate insulation to users, such as broadcasters and newspaper publishers, who are particularly vulner- able to this type of infringement suit. On the other hand, by establishing a realistic floor for liability, the provision preserves its intended deterrent effect; and it would not allow an infringer to escape simply because the plaintiff failed to disprove the defendant’s claim of innocence. In addition to the general ‘‘innocent infringer’’ provi- sion clause (2) deals with the special situation of teach- ers, librarians, archivists, and public broadcasters, and the nonprofit institutions of which they are a part. Section 504(c)(2) provides that, where such a person or institution infringed copyrighted material in the hon- est belief that what they were doing constituted fair use, the court is precluded from awarding any statu- tory damages. It is intended that, in cases involving this provision, the burden of proof with respect to the defendant’s good faith should rest on the plaintiff. Editorial Notes AMENDMENTS 2010—Subsec. (c)(2). Pub. L. 111–295 substituted ‘‘sec- tion 118(f)’’ for ‘‘subsection (g) of section 118’’. 2004—Subsec. (c)(3). Pub. L. 108–482 added par. (3). 1999—Subsec. (c)(1). Pub. L. 106–160, § 2(1), substituted ‘‘$750’’ for ‘‘$500’’ and ‘‘$30,000’’ for ‘‘$20,000’’. Subsec. (c)(2). Pub. L. 106–160, § 2(2), substituted ‘‘$150,000’’ for ‘‘$100,000’’. 1998—Subsec. (d). Pub. L. 105–298 added subsec. (d). 1997—Subsec. (c)(2). Pub. L. 105–80 substituted ‘‘the court in its discretion’’ for ‘‘the court it its discre- tion’’. 1988—Subsec. (c)(1). Pub. L. 100–568, § 10(b)(1), sub- stituted ‘‘$500’’ for ‘‘$250’’ and ‘‘$20,000’’ for ‘‘$10,000’’. Subsec. (c)(2). Pub. L. 100–568, § 10(b)(2), substituted ‘‘$100,000’’ for ‘‘$50,000’’ and ‘‘$200’’ for ‘‘$100’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1999 AMENDMENT Pub. L. 106–160, § 4, Dec. 9, 1999, 113 Stat. 1774, provided that: ‘‘The amendments made by section 2 [amending this section] shall apply to any action brought on or after the date of the enactment of this Act [Dec. 9, 1999], regardless of the date on which the alleged activ- ity that is the basis of the action occurred.’’ EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–298 effective 90 days after Oct. 27, 1998, see section 207 of Pub. L. 105–298, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–568 effective Mar. 1, 1989, with any cause of action arising under this title before such date being governed by provisions in effect when cause of action arose, see section 13 of Pub. L. 100–568, set out as a note under section 101 of this title. § 505. Remedies for infringement: Costs and at- torney’s fees In any civil action under this title, the court in its discretion may allow the recovery of full costs by or against any party other than the United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs. (Pub. L. 94–553, title I, § 101, Oct. 19, 1976, 90 Stat. 2586.) HISTORICAL AND REVISION NOTES HOUSE REPORT NO. 94–1476 Under section 505 the awarding of costs and attor- ney’s fees are left to the court’s discretion, and the sec- tion also makes clear that neither costs nor attorney’s fees can be awarded to or against ‘‘the United States or an officer thereof.’’ § 506. Criminal offenses (a) CRIMINAL INFRINGEMENT.— (1) IN GENERAL.—Any person who willfully infringes a copyright shall be punished as pro- vided under section 2319 of title 18, if the in- fringement was committed— (A) for purposes of commercial advantage or private financial gain; (B) by the reproduction or distribution, in- cluding by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted