Copyright: Are statutory damages appropriate in the digital age?
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Copyright: Are statutory damages appropriate in the digital age?

A lively debate over the merits of statutory damages took place during a public meeting yesterday, hosted by the Department of Commerce and the USPTO.

The meeting, which was webcast live, was part of an effort to gather public feedback on the Green Paper on Copyright Policy, Creativity and Innovation in the Digital Economy, published in July by the Department's Internet Policy Task Force (IPTF). The USPTO and the National Telecommunications and Information Administration (NTIA) have offered input into the paper.

The Green Paper contains proposals for updating the copyright law and suggestions for private sector initiatives. The Department of Commerce claims that it is the most comprehensive review of copyright law since 1995.

The main proposals

The paper proposes gathering input about how to improve the notice and takedown system under the Digital Millennium Copyright Act (DMCA).

It also suggests collecting public comments and holding roundtables on:

· Laws governing the creation of remixes;

· The relevance and scope of the first sale doctrine in the digital environment;

· Statutory damages for individual file-sharers and secondary liability for large-scale online infringement;

· What the government's role should be, if any, in helping to improve online licensing

The Department has received various public comments from organisations and individuals.

The scale of the damages

Much of the debate revolved around the subject of statutory damages. While some speakers criticised "cartoonish" awards imposed on members of the public, others argued that statutory damages are more necessary than ever in the digital age.

Out of 177 WIPO member states, the US is one of just 24 countries that have statutory damages for copyright infringement.

Statutory damages for copyright infringement range from $750 to $30,000 per work infringed. In cases where the copyright owner can prove that the infringement was wilful, the court can increase statutory damages up to $150,000.

Sandra Aistars of the Copyright Alliance said statutory damages are often the only recourse for copyright owners, given the difficulty in proving the amount of money lost when an infringer makes a work available to the whole internet.

"The infringement might not have made a profit, but that doesn't lessen the infringement that has occurred," she said.

Aistars said many businesses rely on statutory damages as a deterrent.

She said that, considering the costs of litigating in a federal court, the availability of statutory damages is often used to decide whether to pursue a claim.

Checks and balances

Professor Peter Menell of University of Berkeley School of Law said that in many cases, the monetary value of the work is not sufficiently valuable to make it worth pursuing in a federal court. He suggested that a small claims court or "parking ticket" style system could be more appropriate ways to deal with infringement.

He said the law should distinguish between commercial and non-commercial infringers and ways to scale the damages.

"Aggregating $150,000 across hundreds and thousands produces obscene numbers," he said.

"In the Internet age, we want a copyright system that garners public approval. That has been lost and I think statutory damages have played a role."

He said statutory damages were originally created as a solution to problems experienced by the recording industry, which eventually backed away from such cases following negative public reactions to the scale of the damages.

From 2003 to 2008, Recording Industry Association of America-affiliated record labels filed, settled or threatened legal action for alleged copyright infringement against 30,000 individuals, according to a paper by the Electronic Frontier Foundation.

In one case, Capitol Records filed a lawsuit against Jammie Thomas-Rasset, a single mother of four, which resulted in damages of $1.92 million for downloading 24 songs, with no evidence that she had shared the music. On appeal, Capitol Records reduced its claim to $222,000, or $9,250 per track. The market price of the downloads was $23.76. The verdict prompted the judge to urge Congress to reconsider statutory damages.

"We are naturally more sympathetic to a single mother, but she can impose just as much harm on the copyright owner for millions of people to download," said Steven Tepp of Sentinel Worldwide. "The harm may be just that great."

He said the more widespread piracy becomes, the more difficult it is for legitimate businesses to compete.

Markham Erickson of the Internet Association said nascent tech cannot come to market because the threat of damages is so out of proportion.

He said statutory damages need to be considered in the context of primary and secondary liability.

"In other parts of the law, the auto industry isn't held liable for consumers speeding, even though they know those cars will be so used," he said.

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