infringement with notice, or because of a finding of multiple infringements)" (question 9). Twelve such claims were reported. The information that was obtained under these headings, as supplemented by_correspondence and interviews, will be discussed below.

In sum, the questionnaire results that could be tabulated, while they must be taken with caution because of the narrow base on which they rest, point to the following findings:

(1) There is an expectably high ratio of settlements to judgments (7 to 1).

(2) The statutory damage provisions (those other than actual damages and profits) seem to play a minor part in the negotiation of settlements.

(3) In a small group of cases going to judgment, the statutory damage provisions were used to a significant extent (about 25 percent). (In reported decisions of the same period, their use is much higher-60 percent.)

(4) Attorney's fees, stemming from another statutory provision, were awarded in a significant number of the judgments (about 30 percent). The basis for these awards is another matter which will be discussed below.

It should be reiterated that these observations do not apply to performance-right cases.

III. ACTUAL DAMAGES

This section and the following one on profits are, to a greater extent than the rest of this study, simply supplementary to "Copyright Law Revision Study No. 22" by William Strauss [in the present committee print].

Though it appeared that actual damages were the basis for a substantial number of recent judgments, according to questionnaire respondents, they appear in few reported decisions. One shortcoming of actual damages as a remedy in copyright cases, it has long been considered, is the supposed difficulty of computing them. Since works subject to copyright are by and large differentiated from each other, it is difficult to establish values. If the value of the work before the infringement and its diminished value afterward are sought, in accordance with one approved technique of damage law, two valuations are necessary. Or, if the plaintiff's lost profits are proposed as a measure of his damages, there is the problem of establishing with reasonable certainty what they would have been.

On the other hand, it is suggested that where valuations are called for, expert testimony is admissible, in line with the admissibility of such testimony in cases where profits have to be apportioned. As for lost profits, the trend in damage law in recent decades has been to relax the requirements of exactness. Once the fact of damage has been established, some freedom is left to the trier to estimate the amount.?

8

The application of both these principles is illustrated by the wellknown case of Universal Pictures Co. v. Harold Lloyd Corp. There the defendant, Universal, and the codefendant, Bruckman, a scriptwriter employed by Universal, were found to have appropriated, in

See note, "The Requirement of Certainty in the Proof of Lost Profits," 64 Harv. L. Rev. 317 (1950). 163 F.2d 354 (9th Cir. 1947).

59537-60

1943, an extensive comedy sequence from Lloyd's "Movie Crazy," in the production of which Bruckman had been employed by Lloyd in 1931-32. The trial court awarded Lloyd actual damages of $40,000 (along with an injunction, and attorney's fees of $10,000). This sum was considerably greater than Universal's profits attributable to the infringement: and profits as such were not included in the award.

To fix damages it was necessary to determine the value of Lloyd's movie if it were reissued or remade, and the extent to which the infringement had impaired that value. For this purpose the court heard testimony about the profitability of the movie on its initial run-$400,000 during a period of economic depression. Harold Lloyd and two experts testified as to its possible profitability as a reissue or a remake, and to the considerable impairment of that value by the defendant's widely distributed infringement of a major component (the "magician's coat" sequence in issue accounted for about 30 percent of the original cost of production of "Movie Crazy"). Experts for the defendant gave opposing testimony-that "Movie Crazy" was obsolete and of no value. The trial court had to take into account these conflicts of testimony, and also the effect on the reissue value of "Movie Crazy" resulting from another infringement by Columbia Pictures, in a short comedy, of the same material.

The judgment withstood attack from both parties. Defendants asserted that the damages were too uncertain and speculative, and attacked the plaintiff's use of experts. Plaintiff claimed, on the one hand, that the actual damages were $400,000, and, on the other, that the court should have given consideration to statutory damages, which according to his calculations, would be $50 for each of the 6,636 theaters in which the infringing picture was exhibited, or $331,800. The circuit court upheld the trial court's exercise of discretion in awarding actual damages rather than profits or statutory damages, its admission of testimony of "alleged experts," and its final figure.

It is quite possible that the use of expert testimony might be too costly a method of proof except where the amounts involved are large. There is another type of case in which actual damages may also be appropriate, and in which they are more readily computed. As distinct from plagiarism cases like Universal Pictures, these cases raise no issue whether the defendant used the plaintiff's material. The questions turn rather on the defendant's right to use the material, in the light of earlier or incomplete contractual relations between plaintiff and defendant. These may be called "contractual" cases. An apt illustration is the very recent case of Szekely v. Eagle Lion Films, Inc. There the defendant Eagle Lion used a screenplay for which the plaintiff, under the terms of a contract with a codefendant, Geiger, was to receive $35,000, of which only $10,000 had been paid. The court held that the defendant's appropriation had made plaintiff's interest in the play valueless, and that plaintiff was entitled to the unpaid $25,000 as compensatory damages.

Another recent case which illustrates the use of an earlier contract price as the measure of damages is Advertisers Exchange v. Hinkley. 10

242 F.2d 266 (2d Cir. 1957).

10 199 F.2d 313 (8th Cir. 1952), cert. denied, 344 U.S. 921 (1953) affirming 101 F. Supp. 801 (W.D. Mo, 1951). See also Gordon v. Weir, 111 F. Supp. 117 (E.D. Mich. 1953). Plaintiff's recovery was computed in part on the basis of his income from previous dealings with the defendant in similar copyrighted material used in a newspaper contest. For other infringements in the same case minimum damages were awarded, and for still others, defendant's profits.

There a merchant had had a 1-year contract with the plaintiff for the use of the plaintiff's copyrighted advertising services, at a price of $156. After the year was up the defendant merchant continued to use plaintiff's copyrighted mats for advertising in a local paper for almost 2 years. The court, rejecting plaintiff's contention that it was entitled to statutory damages of about $90,000 (computed by plaintiff at the rate of $1 for each copy of the newspaper in which the advertisements were published), said that the only damage the plaintiff could have suffered was $312-2 years' income at the contract price. Judgment was awarded for this amount. Though the discussion, especially in the court of appeals, is largely in terms of statutory damages, since the plaintiff did not claim actual damages, it is clear that the computation reflected putative actual damage, measured by the contract price.

It thus appears that in appropriate cases techniques are available for determining actual damages. To the extent that these techniques seek to overcome the uncertainty of valuing a unique creation by permitting rather free estimates, they raise one further question. Suppose the plaintiff demands a jury trial on the issue of damages. Some fears have been expressed, derived from experience in unfair competition and common-law copyright cases, especially in California, that juries may make excessively large awards.1

Thus far there seem to be not enough instances to support a generalization that juries are overgenerous in this field. No cases reported under the Copyright Act seem to have resulted in large awards by juries. Awards that are "grossly excessive" or that fail to meet other measuring sticks of judicial discretion may of course be cut down by remittitur (unless the plaintiff chooses the alternative of a new trial). The scope of remittitur in the Federal courts is narrower than in many State courts, at least at the appellate level, where the courts of appeal have long deferred to the discretion of the trial judge and to the command of the seventh amendment that "no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law." But there seems to be no question that the Federal trial judge has some power to set aside excessive verdicts. 12 And reviewing courts are said to be more perceptive of reversible error when verdicts are swollen.

IV. PROFITS

The award of "all the profits which the infringer shall have made from such infringement" is a subject which seems to have been well developed in the case law, as outlined in the Strauss memorandum and elsewhere.13 There may be practical difficulties in making an accurate accounting of profits in cases where an irresponsible infringer keeps inadequate records;14 and any accounting may be complicated

On the availability of jury trial, see Karp, "Copyright Litigation," in 7 Copyright Problems Analyzed 171 (1952) on their frequency in California; Carman, "The Function of Judge and Jury" in the "Literary Property" Lawsuit, 42 Calif. L. Rev. 52 (1954). Much of the California litigation has been brought in the State courts on an implied contract theory (one correspondent says this is so even when the material is copyrighted). See Kaplan, "Implied Contract and the Law of Literary Property," 42 Calif. L. Rev. 28 (1954), reporting (notes 5-6) judgments of $25,000 and $35,000 in the Golding and Stanley cases. Much larger jury verdicts have been reported in the trade press in cases which were not appealed and in which there was probably a settlement for a lesser sum.

12 See Moore, "Federal Practice," par. 59.05(3), 59.08 (6); Neese v. Southern Ry. Co., 350 U.S. 77 (1950). 13 Strauss, op. cit., supra, note 5 at 5-7; Warner, "Radio and Television Rights," sec. 162 (1953). Warner also discusses many of the other cases and problems treated in this study.

14 But the statute, by requiring the plaintiff to "prove sales only," puts most of this burden on the defendant; see Whitman Publishing Co. v. Writsell, 83 U.S.P.Q. 535 (S.D. Ohio 1949).

by difficulties, not peculiar to this field, of allocating overheads or other joint costs.15

A major anomaly in the award of profits was ended by the Sheldon case in 1940, when the Supreme Court affirmed the decision of the second circuit 16 that profits could be apportioned, thus, giving effect to the seemingly clear statutory mandate quoted above. The earlier rule compelling an award of all profits on an infringing production, without determining the contribution of the work infringed to the final product, may have resulted in a denial of relief in cases where the courts were unwilling to bestow a huge windfall on the plaintiff."7

The Sheldon case calls for liberality to the plaintiff where the extent of his contribution cannot be accurately determined. The few apportionments made in the cases since Sheldon, apparently influenced by the 20 percent of profits from a motion picture awarded to the author in that case, seem to have followed that admonition.18 Such liberality may be misplaced when the profits of an innocent infringer are taken. After his success in the case against MGM, Sheldon sued the operators of the Capitol Theater in New York for their profits from a 2-week run of the picture. The court in this case probably had no alternative to adopting the same percentage used in the main case, with the result that the defendant had to pay over $3,099 profits (plus $1,500 attorney's fees, and a $1,000 allowance to a special master), even though the court found that the respondent "is unquestionably an innocent infringer." The plaintiff had already been awarded, as his share of the profits of the producer, far more than the probable commercial value of his play. He was now in a position to exact a reward from thousands of exhibitors who ordinarily would make no direct contribution to the author.19 However, an apportionment such as was made in the Capitol Theater case is clearly preferable to taking all the profits of an innocent infringer. The situation of the innocent infringer with respect to statutory damages will be discussed in part V below.

V. STATUTORY DAMAGES

A. MUSIC PERFORMING RIGHTS AND THE MINIMUM DAMAGE PROVISION

It has been previously suggested that performing rights cases stood somewhat apart from other claims for damages. There are two related reasons for this. First, the existence of powerful collective licensors of performing rights in musical compositions has permitted a vigorous enforcement of those rights. Second, in such enforcement the statutory $250 minimum damage provision has been an important and controversial weapon.

There are three licensors of performing rights whose practices are of interest. ASCAP, the American Society of Composers,

15 Consult note, "Monetary Recovery for Copyright Infringement," 67 Harv. L. Rev. 1044, 1049 (1954). 16 Sheldon v. Metro-Goldwyn Pictures Corp., 106 F. 2d 45 (1939), aff'd 309 U.S. 390 (1940).

17 E.g. Witwer v. Harold Lloyd Corp., 46 F. 2d 792 (S.D. Cal. 1930), rev'd 65 F. 2d 1 (9th Cir. 1933); see dissenting opinion at pp. 44-47. The circuit court, in reversing the district court, found no infringement of plaintiff's story in a movie which made profits of $1 to $2 million, though access was proved and similarities were plausible. The plaintiff had never got more than $1,000 for a movie story.

19 Harris v. Miller, 57 U.S.P.Q. 103 (S.D.N.Y. 1943) (35 percent of profits of play allocated to script); Stonesifer v. 20th-Century Fox Film Corp., 48 F. Supp. 196, (S.D. Cal. 1942) aff'd 140 F.2d 579 (9th Cir. 1944) (20 percent of movie profits).

19 Sheldon v. Moredall Realty Corp., 29 F. Supp. 729 (S.D.N.Y. 1939); cf. Washingtonian Pub. Co. v. Pearson, 140 F. 2d 465 (D.C. Cir. 1944). There a 10-percent apportionment was made for a few pages of a book that were unintentionally infringing. But the publisher, who had made substantial profits, was bankrupt; the judgment against the authors, who had not received most of their royalties, was for $15.46; the printer had made no profits.

Authors & Publishers, is the oldest and largest. Broadcast Music, Inc., a rival to ASCAP formed in 1940 and controlled by broadcasters, has steadily grown in importance. SESAC, Inc., does not compare with the other two in size; it is apparently the only significant independent survivor of a number of privately owned licensors that once existed. 20

For all three organizations the largest market by far is in broadcasting, and here it may be said that the statutory damage provisions are only of theoretical significance. Broadcasters negotiate licenses with the licensors, and if, as occurred in the famous dispute in 194041, no contract is in effect, the broadcaster avoids using the works of the licensor pending a new contract. Infringements by networks would be easily detected. However, ASCAP advises that whereas in 1940-41 there were only about 800 radio stations, and no television stations, there were as of December 1, 1956, 3,515 radio stations and 511 television stations. This presents an ever-present problem with non-network stations which may not have the necessary licenses to perform copyrighted works. In such cases, ASCAP advises, it incurs substantial expense in detecting and obtaining evidence of infringements by means of taping broadcasts throughout the country. Among the vast number of what may be called miscellaneous users, however, there are always new or old enterprises that either through ignorance or design do not take out licenses. Miscellaneous users include—

Restaurants, taverns, dance halls, hotels, department stores, and such wired music concerns as Muzak. Of late, factories and similar industrial establishments have become important users of music.21

Licenses are always available at rates of which some representative current examples are given in table A [at page 90].

Since ASCAP pioneered in the enforcement of performing rights against such infringers, its technique may be summarized first. The practice appears not to have changed substantially from a description given in the Yale Law Journal 20 years ago, based on 1936 congressional hearings.

*

When the society is informed through its extensive network of investigators throughout the country that some unlicensed theatre or cafe or hotel is using copyrighted music, it writes a letter informing the proprietor that he is violating the law and suggesting that he take out a license. The relevant sections of the copyright law are quoted, the leading cases cited, and the definition of "performance for profit" as laid down by the Supreme Court in Herbert v. The Shanley Co., reported in full. If there is no response, additional letters in much the same tone follow, with perhaps more emphasis on the possibility of a suit. Finally, if the proprietor persists in disregarding these warnings, suit is brought for infringement. Realizing that under the minimum damage provision there can be no defense to this action, however, the proprietor will usually capitulate before trial and obtain a license from the Society. But even when judgment has been finally entered, the Society very rarely attempts to recover upon it, and generally compromises for the cost of a license to the infringer from the time the infringement was first discovered plus the expenses of the investigation and suit.22

Through its field offices and the lawyers who represent it throughout the country, ASCAP keeps a substantial number of these enforcement

20 See Warner, "Radio and Television Rights" (1953), ch. 13, especially pp. 361-366 (SESAC and minor licensors).

21 Finkelstein, "Public Performance Rights in Music and Performance Rights Societies," in 7 Copyright Problems Analyzed 69, 78 (1952).

[Editor's note: A description of the present practice of ASCAP is given by Mr. Herman Finkelstein in his comments appearing on pp. 107-109 of the "Comments and Views" attached hereto.] Comment, "Copyright Reform and the Duffy Bill," 47 Yale L.J. 433, 443 (1938).