(g) "the limitation as to the amount of recovery [shall not] apply to infringements occurring after the actual notice to a defendant * * * 11 (4) Another form of statutory damages is found in section 1(e) and section 101 (e), with respect to mechanical recordings. The court may require infringers to pay up to four times the statutory royalty. This subject will not be treated in this study. (5) "the court may award to the prevailing party a reasonable attorney's fee as part of the costs" (sec. 116). In short, there are three major elements of the damage provisions with which this report is concerned: (1) actual damages and profits, (2) statutory damages, including all the refinements listed in items (a) to (g) above, (3) costs and attorney's fees. Actual damages are of course the cornerstone of commonlaw remedies; infringer's profits are an equally familiar concept from equity practice. Their statutory embodiment is, however, not free of ambiguities. For example, there is the question whether the phrase "as well as" is to be read literally so as to permit the recovery of damages and profits, or whether it can be taken in what is usually considered a more rational disjunctive meaning. Such questions of interpretation are not our concern, unless they seem to affect the practical administration of the statute either by the courts or by lawyers in settling cases. We will instead ask: To what extent are actual damages and profits determinable in copyright cases? To what extent are they awarded? Similar questions should be asked about statutory damages. To what extent do parties and courts resort to them because of the supposed indeterminacy or inadequacy of actual damages? If they are preferred by plaintiffs, do they appear to contain inequities for defendants? What parts of the statutory damage scheme are actually used, and by whom? Here we have to consider the general $250 minimum, the general $5,000 maximum, the various special minima and maxima, and the suggested schedules "First" through "Fourth." With respect to attorney's fees, how often are they awarded, in what amounts, and in what circumstances? What role does their possible availability play in settlements? Partial answers to these questions have been sought from three sources. First, the reported cases; second, a questionnaire; third, interviews and correspondence which amplified the questionnaires, or which were independently initiated. We interviewed about 25 lawyers experienced in copyright matters, and had helpful letters from perhaps 10 more. Information derived from these last sources, and from the cases, will be drawn upon at appropriate places. The questionnaire requires separate analysis. It is reproduced below. 4 See Henn, The Compulsory License Provisions of the United States Copyright Law [Study No. 5 in the present series of Committee Prints, pp. 13-21]; Shapiro, Bernstein & Co. v. Goody, 248 F. 2d 260 (2d Cir. 1957), holding, inter alia, the $250 minimum damage provision of sec. 101(b) inapplicable to an infringing phonograph record, because secs. 1(e) and 101(e) create a separate statutory scheme of damages. An interviewee stated that the provisions for discretionary awards of three times the statutory license fee, in addition to the basic two cents per "part" manufactured, are not invoked in practice. See Strauss, "The Damage Provisions of the United States Copyright Law" [Study No. 22 in the present Committee Print, p. 5]. COPYRIGHT DAMAGES SURVEY MARCH 1957. (All estimates can be approximate. Please confine yourself to the postwar period.) 1. Approximately how many cases have you handled in the last 10 to 12 years that involved copyright money damage claims? 1 to 5. 6 to 10. If more than 10, about how many.. (By case, we mean any matter that involved communication with an opposing party, not just advice to a client.) 2. Have you handled any common law literary property cases that involved damage claims? (approximate number) 3. In what rough percentage of those cases in questions 1 and 2 were you representing Plaintiffs? (include counterclaiming defendants) Defendants?_ 4. How many of these cases were settled or otherwise disposed of before judgment?___ 5. Of the cases closed before judgment, how many would you say were (a) Cessation (by license or otherwise) of infringement. - - - (i) Actual damages. (ii) Infringer's profits. (c) Money settlement based on statutory damages. (d) Money settlement based on expenses of suit, including attor- 6. How many of your cases were carried to judgment?__ 7. In those cases carried to judgment in which there was a recovery, in how many was recovery (a) Based on actual damages. (b) Based on infringer's profits. (d) In how many was the successful party awarded an attorney's 8. If you had any cases involving the award of statutory damages (item (If so, could you describe them briefly on a separate sheet?) How many, if any, of the statutory damage cases resulted in the award of the $250 minimum statutory damages?___ 9. Have you had any cases, either settled or tried, that involved statutory damages in excess of $5,000 (because of infringement with notice, or because of a finding of multiple infringements)?__ (If so, could you describe them briefly on a separate sheet?) (b) Innocent infringement of nondramatic work by motion pic- (c) Innocent infringement of nondramatic work by broadcast (If so, could you describe them briefly on a separate The information in this questionnaire will be used in attempting to reach conclusions about the use and usefulness of the damage provisions. It will not be ascribed to you. May we communicate with you further about your experience with the damage provisions? Yes Whether any further information is to be ascribed to you or quoted from you will be determined by mutual agreement in each case. No II. THE QUESTIONNAIRE A little more than 500 copies of the questionnaire reproduced on the foregoing pages were sent out, of which about 480 went, in late March 1957, to the members of the Copyright Society of the U.S.A., through the kindness of its then President Joseph A. McDonald, and Mr. Fred B. Rothman. Eighty-eight questionnaires were returned, of which 30 reported no "cases," as defined in the questionnaire-"any matter that involved communication with an opposing party, not just advice to a client." Five returns from performing-right societies or their counsel will be treated separately. This leaves 53 reporting one or more cases. Thirteen of these respondents, with a total of approximately 50 cases, reported that none of their cases had resulted in any monetary payments. These respondents are not included in the tabulations that follow. If they were included, the only effect would be to increase to some extent the number of settlements based on cessation of the claimed infringement a figure which, though large, could not be tabulated (see p. 67 below). Another respondent, who had been connected with about 50 cases, was unable to provide any numerical breakdown of his cases; so his return is also omitted. The remaining 39 respondents are those whose experience (in the postwar period) included some cases in which money payments were made, as well as those that were otherwise disposed of. This is less than half of all those responding, and less than 10 percent of those approached, not a very rewarding return, even if one considers that many of the members of the Copyright Society are libraries and others not in active practice. Nevertheless, the 39 respondents listed a total of roughly 850 cases, so the results are not altogether insignificant, even after the following qualifications are emphasized. 1. A glance at the questionnaire will show that estimates and approximations were all that was requested in most instances, and indeed all that could be provided without great difficulty. Most of the totals given here are rounded, and are the rough medians of the range of cases reported under a given question. 2. The questionnaire was apparently unclear at some points. This was of course not intended. On the other hand, deliberate effort to encourage responses by keeping the questions as simple as possible resulted in our seeking no information about the kinds of infringements reported. When it became apparent that music performing rights cases should be separated, we were able to identify plaintiffs with fair accuracy, defendants with less. Particu 3. A few respondents account for a great many cases. larly, one west-coast firm reported, under question 1, 100 cases, mostly on behalf of plaintiffs and with a large preponderance of common-law cases. A New York firm reported 150 cases with a similar disproportion. Another New York firm reported more than 50 cases, usually on behalf of defendants. These three respondents thus accounted for about one-third of all the cases reported. Their special patterns must be kept in mind. A. GROSS RESULTS Of the total of 850 cases, about 250 were common-law literary property cases (question 2). Half of the common-law cases came from the two respondents mentioned above with the largest numbers of cases. For this reason no inference should be drawn that commonlaw cases amount to almost one-third of copyright claims in actual practice. But they do so figure in these tabulations. Representation of plaintiffs was reported in about 400 cases, for defendants in about 450 (question 3). Half of the total plaintiffs' representations are accounted for by the same two firms; representation of defendants was much more widely dispersed. The ratio of settlements to judgments was elicited by questions 4 and 6. Of the 850 cases ("controversies" might have been a better term), about 700 were settled, and 90 were carried to judgment. Sixty were either pending, discontinued without any definite settlement, or unaccounted for because of discrepancies in reporting. B. BASES FOR SETTLEMENTS The settlement of seven cases out of eight will presumably come as no surprise. What was sought in question 5 was an indication of the elements that went into these settlements. The question was not well expressed, and there was much inconsistency in the responses. Still, certain conclusions emerge. Cessation of the claimed infringement, with no money payment, was the outcome of a very substantial number of cases, for which a meaningful number cannot be given because of uncertain estimates. Many of these cases were accompanied by negotiation of a license for further use. Sixty settlements were described as based on actual damages, and only 10 on defendant's profits. Together these two factors, which would probably be influential whether or not they were explicitly sanctioned by the statute, formed the basis for only 10 percent of the settlements. Thirty-two settlements were reported to be based on "statutory damages" (we did not ask for further specification). This is less than 5 percent of the total. If we now take into account the likelihood that about one-third of the settlements occurred in commonlaw copyright cases where statutory damages would be inapplicable, the percentage is still only 7. Furthermore, 2 respondents, 1 listing 15 and the other 10 such cases, made up three-fourths of the modest total of 32. Under the heading "Money Settlement Based on Expenses of Suit, Including Attorney's Fees," 135 cases were reported, 20 percent of the total. This response occurred despite some ambiguity in the question, which was intended to refer to what the expected expenses of litigation would be. Finally, six respondents volunteered "general bargaining power," or its equivalent, as the basis for settlement in 93 cases, 13 percent of the total. It is apparent that statutory damages played only a minor role in the attainment of the settlements enumerated by these 40 respondents who, it should be remembered, are not intended to include parties to claims based on music performing rights. However, the possibility of statutory damages, particularly minimum damages and attorney's fees, may have been influential in the many cases where the defending party gave some sort of undertaking that the alleged infringement would not be continued or repeated. C. BASES FOR JUDGMENTS In the replies to item 7 on the questionnaire, actual damages were reported as the basis for 40 of the 54 judgments in which recoveries were reported (the remaining 36 judgments out of the total of 90 apparently went for defendants. In some only injunctive relief may have been sought). Profits were awarded in five. For this purpose it is unnecessary to separate common-law from statutory cases, since the availability of actual damages or profits is essentially the same in either kind of action. Statutory damages were reported to underlie nine judgments. If the assumption is made that one-third (18) of the judgments were in common-law cases (following the overall ratio of commonlaw to statutory copyright matters in the entire sample), then statutory damages were the basis for about 25 percent of the 36 plaintiff's judgments assumed to have been awarded under the Copyright Act. This 25 percent is still subject to considerable error; the reader should not be misled by the apparent exactness of the small numbers we are now reviewing, for they also are partly estimated and contain various discrepancies. But the role of statutory damages in judgments is by any measure significantly greater than their apparent influence on settlements. This is the one area in which the questionnaire results can meaningfully be compared with reported decisions, and such a comparison is rather startling. In the same decade to which the questionnaire was directed, there are 24 reported decisions in which plaintiffs were successful (not counting one performance right case.) In two of these an injunction only was awarded. Two cases awarded actual damages, four profits. Four used a combination of elements for different counts-profits and statutory damages, actual damages and profits, actual and statutory damages, and (in one case) all three. It will be noted that statutory damages figured in three of these "combination" cases. The remaining 12 cases were all awards of statutory damages. Thus statutory damages appeared in 15 out of 24 cases, or about 60 percent. This ratio is so much greater than that shown by the questionnaire that some explanation is called for. Indeed, the proportion of actual damage and statutory damage cases is, between the questionnaire and the reported decisions, in effect reversed. Perhaps there are a large number of cases involving actual damages that raise no important questions of law, and are not reported. Next, the questionnaire returns show that attorney's fees were awarded in 18 cases, 30 percent of the 60 cases going to judgment that are assumed to have been brought under the Copyright Act. The attempt to get specific information, in questions 8, 9, and 10, about the application of the numerous components of statutory damages, did not yield any statistically meaningful returns, except in a negative way. That is, only occasional references were made to any one of the specifications of statutory damages, with the single exception of claims for "statutory damages in excess of $5,000 (because of The cases were taken from "Copyright Decisions" through Copyright Office Bulletin No. 29 (1953-54) and thereafter from U.S.P.Q. through May 1957. |