A. Damages.

CONTENTS

Page

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I. History of the damage provisions.

II. The present damage provisions..

1. Actual damages.

2. Profits

3. Statutory damages..

(a). Actual damages and/or profits versus statu

tory damages.

(b). Measure of damages.

(c). Multiple infringements..

(d). Intent to infringe.

(e). Infringement of musical recordings.

III. Proceedings for infringement in other countries.

IV. Previous revisions of the damage provisions.

V. Previous proposals for revision of the damage provisions..

1. The Vestal bills.

2. The Sirovich and Duffy bills.

3. The Shotwell bill.

B. Costs and attorney's fees.

I. History of provisions on costs and attorney's fees.

II. The present provisions.

C. Recapitulation of major issues

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THE DAMAGE PROVISIONS OF THE COPYRIGHT LAW

This study treats two related subjects: First, damages for copyright infringement; and, second, costs and attorney's fees. The first subject includes the questions of compensatory and statutory damages, and profits. The second treats the award of expenses incurred in the prosecution of an infringement action, or in the defense against such action. Despite several legislative efforts at revision, the provisions on damages and costs are still substantially the same as those of the Copyright Act of March 4, 1909.

A. DAMAGES

I. HISTORY OF THE DAMAGE PROVISIONS

1. Colonial copyright statutes

On May 2, 1783, the Continental Congress passed a resolution recommending to the several States to secure to the authors or publishers of new books the copyright of such books. All States except Delaware followed this recommendation and passed copyright stat

utes.

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Under the damage provisions of these State statutes an infringer was either liable to pay "just damages," or "double the value of all the copies"; or the statute provided for maximum and minimum damages; or a fixed sum had to be paid for each infringing sheet. In some cases one-half of the payment accrued to the benefit of the injured party, and the other half went to the State. Thus, there were actual damages, statutory damages, forfeitures, and penalties.

2. The Federal copyright statutes

Congress exercised the power granted it by article I, section 8, of the Constitution by passing a Federal Copyright Act on May 31, 1790. Section 2 of this act (1 Stat. 124) gave the copyright owner an action against unauthorized publication, the offender to "forfeit and pay the sum of fifty cents for every sheet ***, the one moiety thereof to and for the use of the United States." Under section 6 an infringer was further "liable to suffer and pay to the *** author or proprietor all damages occasioned by such injury."

The act of April 29, 1802 (2 Stat. 171) extended copyright protection to designs, engravings, and prints, and provided in section 3 for the forfeiture of $1 for every infringing print, half to accrue to the plaintiff and the other half to the United States.

1 This resolution and the State statutes are collected in "Copyright Laws of the United States of America, 1783-1956," published by the Copyright Office, 1956.

2 Connecticut, Georgia, and New York.

Connecticut, New Jersey, North Carolina, Pennsylvania, and Virginia,

4 Massachusetts, New Hampshire, and Rhode Island.

Maryland and South Carolina.

North Carolina and South Carolina.

The act of February 15, 1819 (3 Stat. 481) provided that infringement actions, which previously had to be brought at law, might also be prosecuted in equity. The circuit courts of the United States were given the power to grant injunctions to prevent or stop infringement. The act of February 3, 1831 (4 Stat. 436) which added musical compositions to the classes of protected works, differentiated between forfeitures in regard to infringement of books on the one hand and of prints, cuts, engravings, maps, charts, and musical works on the other. In the case of infringement of a book the forfeiture amounted to 50 cents per sheet, and in the other cases to $1, half of the proceeds accruing to the use of the United States. Section 9 provided that an infringer was liable for all damages, "to be recovered by a special action on the case founded upon this Act." Section 12 provided "that, in all recoveries under this Act, either for damages, forfeitures, or penalties, full costs shall be allowed thereon."

The act of August 18, 1856 (11 Stat. 138) granted performance and publication rights in dramatic compositions. Unauthorized performance made the infringer

liable to damages to be sued for and recovered by action on the case or other equivalent remedy with costs of suit *** such damages in all cases to be rated and assessed at such sum not less than one hundred dollars for the first and fifty dollars for every subsequent performance.

Section 99 of the Copyright Act of July 8, 1870 (16 Stat. 198) provided that an infringer "forfeit and pay such damages as may be recovered in a civil action." Section 100, in addition to repeating the $1 forfeiture per sheet for infringement of maps, musical compositions, etc., provided that an infringer, in the case of infringement of a painting, statue, or statuary, forfeit $10 for every infringing copy, half of the proceeds to go to the plaintiff and the other half to the United States. Section 101 again provided for damages of $100 for the first, and $50 for all subsequent unauthorized performances of a dramatic work. Section 102 provided for all damages occasioned by an infringement to be recovered in an action on the case. Section 108 allowed full costs in all recoveries under the copyright laws, either for damages, forfeitures, or penalties."

The act of March 2, 1895 (28 Stat. 956) provided that in the case of infringement of a copyrighted photograph made from any object not a work of fine arts, the sum recovered was to be not less than $100 nor more than $5,000, and that in the case of infringement of a copyright in a painting, drawing, engraving, etching, print, or model or design for a work of art, or a photograph of a work of the fine arts, the sum to be recovered was to be not less than $250 nor more than $10,000. One-half of such sum accured to the copyright proprietor and the other half to the United States.

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The damage provisions now in effect are the following: Section 101(b) of the copyright law provides for actual damages and profits or, in lieu of actual damages and profits, for statutory damages which "shall not be regarded as a penalty." Section 101 (e) in conjunction with section 1(e) provides special remedies for infringement of musical works by means of mechanical reproduction. Section 1(c) prescribes maximum damages for innocent infringement of nondramatic works by broadcast.

7 The act of Mar. 3, 1891, extended protection to foreign authors.

*17 U.S.C., 61 Stat. 652 (1947), as amended. Hereinafter "section" refers to a section of title 17, United States Code, unless otherwise indicated,

3. Analysis of damage provisions before the act of 1909

The first provision for minimum damages appeared in the act of 1856, under which any person giving an unauthorized performance of a dramatic work

shall be liable to damages ***, such damages in all cases to be rated and assessed at such sum not less than one hundred dollars for the first, and fifty dollars

for every subsequent performance, as to the court * * * shall appear to be

just.

As to actual damages, the Supreme Court held in Belford, Clarke and Co. v. Scribner that the measure of damages was the total profits made by publication of the infringing work. Both the unauthorized printer and the publisher of a copyright book were held liable and required to account for the profits of the unlawful publication. The Court held further that, although the entire work might not have been copied, if the portions copied were so intermingled with the rest of the piratical work that they could not be distinguished, then the entire profits should be given to the plaintiff.10 In Callaghan v. Myers" the Court refused to permit the deduction of the cost of stereotyping and of salaries of the defendants.12 In Providence Rubber Co. v. Goodyear 13 the Court stated, in regard to damages, that the elements of price of materials, interest, expenses of manufacture and sale, and other necessary expenditures and bad debts should be taken into account, but in no case should there be a profit to the infringer from his wrongful act. Equity courts permitted recovery of profits (as distinguished from damages) only incidental to awarding an injunction.14 While there was a statutory provision for the recovery of profits in patent cases, there was none for infringement of copyright.

In all copyright acts before 1909, part of a forfeiture accrued to the United States, and therefore these damage provisions were partly penal and partly remedial. 16 The act of 1909 for the first time provided for the recovery of profits in damage actions, 17 and eliminated the penal aspects from awards of damages.

II. THE PRESENT DAMAGE PROVISIONS

Section 101 (b) grants the following types of recovery to the copyright proprietor:

(a) Such damages as he may have suffered due to the infringement;

(b) All the profits which the infringer shall have made from the infringement;

(c) In lieu of actual damages and profits, such damages as to the court shall appear to be just, within the limits specified by the

statutes.

* 144 U.S. 488 (1892).

10 Citing Callaghan v. Myers, 128 U.S. 617 (1888) as to the award of the entire profits.

11 Supra, note 10. The decision was approved in Westinghouse Co. v. Wagner Co., 225 U.S. 604 (1912).

12 The Court distinguished the case from Providence Rubber Co. v. Goodyear, 76 U.S.788, 9 Wall. 788 (1870), in which salaries of officers of a corporation were held deductible. See also Whitman Pub. Co. v. Writsel, 83 U.S.P.Q. 535 (S.D. Ohio 1949); Dam v. Kirk La Shelle Co., 189 Fed. 842 (S.D.N.Y. 1911).

13 Note 12, supra.

14 See Atlantic Monthly Co. v. Post Pub. Co., 27 F. 2d 556 (D. Mass, 1928).

15 Recovery of profits in patent cases was permitted by the act of July 8, 1870, 16 Stat. 198, 35 U.S.C.A. 70. Stevens v. Gladding, 17 How. 447 (1854); Callaghan v. Myers, supra, note 11; Belford, Clarke and Co. v. Scribner, 144 U.S. 488 (1892).

18 Actions for forfeiture were of a quasi-criminal character. See Backus v. Gould, 48 U.S. 798 (1849); Bolles v. Outing Co., 175 U.S. 262 (1899); Westermann Co. v. Dispatch Printing Co., 249 U.S. 100 (1919).

17 H. Rep. No. 2222, accompanying H.R. 28192, 60th Cong., 2d sess. 15 (1909), states: "The provision that the copyright proprietor may have such damages as well as the profits which the infringer shall have made is substantially the same provision found in sec. 4921 of the Revised Statutes relating to remedies for the infringement of patents."