Plaintiff's Actual Damages and Defendant's Profits

• Author: Eric M. Stahl - Henry J. Tashman
• Pages: 11-40

I. Scope and Purpose of the Remedy

Section 504(b) of the Copyright Act provides that a copyright owner

who proves infringement may recover “actual damages suffered by

him or her as a result of the infringement” plus “any prots of the

infringer that are attributable to the infringement and are not taken

into account in computing the actual damages.” These monetary rem-

edies “are two sides of the damages coin—the copyright holder’s losses

and the infringer’s gains.”1 The two categories are based on different

nancial data: the award of actual damages “looks at the facts from

the point of view of the copyright owner” to compensate the owner for

harm suffered, whereas the award of the infringer’s prots “examines

the facts only from the infringer’s point of view” and requires disgorge-

ment of any prot earned from the infringement.2

The purposes of section 504(b) are compensation and restitution:

“Damages are awarded to compensate the copyright owner for losses

1. Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 707–08 (9th Cir. 2004).

2. Davis v. Gap, Inc., 246 F.3d 152, 159 (2d Cir. 2001).

11

CHAPTER 3

Plaintiff’s Actual Damages

and Defendant’s Prots

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from the infringement, and prots are awarded to prevent the infringer

from unfairly beneting from a wrongful act.”3 Although punishment

and deterrence are among the purposes of statutory damages under

section 504(c), actual damages and prots under section 504(b) are not

intended to serve those ends. Courts have rejected jury instructions4

and offers of proof5 that suggest otherwise.

Section 504(b) does not permit dual or cumulative recoveries for

a single act of infringement. A plaintiff is entitled to the defendant’s

prots from the infringement only to the extent that the prots have

not already been accounted for in the calculation of the plaintiff’s

actual damages:

Where the defendant’s prots are nothing more than a measure

of the damages suffered by the copyright owner, it would be inap-

propriate to award damages and prots cumulatively, since in

effect they amount to the same thing. However, in cases where

the copyright owner has suffered damages not reected in the

infringer’s prots, or where there have been prots attributable

to the copyrighted work but not used as a measure of damages,

subsection [504](b) authorizes the award of both.6

3. H.R. REP. NO. 94-1476, at 161 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5777.

4. See Walker v. Forbes, Inc., 28 F.3d 409, 414–15 (4th Cir. 1994) (trial court properly

refused to instruct jury that the “purpose behind awarding the infringer’s prots to a

copyright owner is to discourage copyright infringement,” because the jury could have

construed the instruction to mean that the Copyright Act permitted such an award as

a penalty).

5. For example, plaintiffs may not introduce testimony supporting imposition of a

“multiplier” of actual damages. See, e.g., Faulkner v. Nat’l Geographic Soc’y, 576 F. Supp.

2d 609, 615–16 (S.D.N.Y. 2008) (granting motion in limine to exclude expert testimony

regarding industry-standard application of punitive multipliers to resolve copyright or

credit disputes). Though such multipliers may be permitted to enhance statutory dam-

ages, they are not relevant to determining the actual damages sustained by a copyright

holder. Stehrenberger v. R.J. Reynolds Tobacco Holdings, Inc., 335 F. Supp. 2d 466, 469

(S.D.N.Y. 2004) (value of a copyrighted work “is not determined by multiplying it”).

6. H.R. R

EP

. N

O

. 94-1476, at 161 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5777. In

this respect, the 1976 Copyright Act differs from the 1909 Copyright Act, which permit-

ted a copyright holder to recover a cumulative award of both its own damages and the

infringer’s actual prots, regardless of whether they overlapped and therefore resulted in

a double recovery. See Abeshouse v. Ultragraphics, Inc., 754 F.2d 467, 470 (2d Cir. 1985).

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