Friday, 18 June 2010

Tip of the day: compensation for infringement of copyright

If someone infringes your copyright, your financial remedies will be either damages or an account of profits. The idea of damages is to put the parties back into the position they would have been, but for the infringement: if you'd have granted a licence had you been asked, a reasonable royalty will be the measure of damages employed, and if you wouldn't the judge will probably look at what the defendant has saved itself.

In an account of profits the court will find out what profit the defendant has made from the infringing act, and award that to the claimant: the profit, after all, is properly theirs.

Once upon a time (before 1988) a rather draconian remedy called conversion damages was available. The court would treat all the takings (not just the profits) from the infringement as the claimant's. The possibility of losing all the proceeds, not just the profits, made would-be infringers (including those whose activities might be marginal) think twice before going ahead.

Now the courts can award such additional damages as the justice of the case may demand. This sounds promising, but additional damages are very rarely awarded, for the simple reason that they push the boundary between compensation and penalty too far. Damages are not there to penalise the infringer, and once an award of damages has been made (so the claimant is restored to the position where they should be) there can be no room for anything to be added that can truly be called "damages".

Some countries - the USA being a prime example - give statutory damages. You can recover a certain amount without having to prove that you have lost anything. This is the blunt instrument that has been used to attack illegal filesharers in the last few years, resulting in substantial awards of damages against them - notwithstanding that very little actual damage has been caused. Statutory damages neatly sidestep the issue.

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