Statutory fee for copyright infringement and additional damages for breach of contract

Author: LegalEase Solutions

RESEARCH FINDINGS

  1. Is there any statutory fee to claim damages for copyright infringement?

According to Copyright Law of the United States of America, Title 17 of the United States Code, Chapter 5 deals with Copyright Infringement and Remedies.  Pursuant to 17 U.S.C. § 504(a) the copyright owner can claim either

  • the actual damages incurred by him and the additional profits made by the infringer using copyrighted works Or,
  • statutory damages as provided in subsection(c) of § 504.

The copyright owner can choose either of the above any time before final judgment is rendered.  See 17 U.S.C. § 504(c).  Moreover, according to the court’s discretion, it can award statutory damages for an amount of not less than $750 and not more than $30,000.  Id.  § 504(c) deals with statutory damages claim.  It reads as follows:

Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

Id.at § 504(1)(c).

If the copyright owner proves that the infringement was willful, then the court can award damages up to $150,000.  Id. at § 504(c)(2).  And if the infringer is able to prove that he or she is not aware that his/her acts would constitute infringement, the court can reduce the damages awarded to not less than $200.  Id.  The section reads as:

In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200. The court shall remit statutory damages in any case where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use under section 107 . . .

Id. at § 504(c)(2).

The copyright owner can claim additional damages pursuant to 17 U.S.C.504(d) in certain cases where the infringer takes a defense under section 110(5), and it is proved that infringer did not have reasonable grounds to believe that its use of copyright works were exempted under the section.  In such cases, the court may award additional damages as twice the license fee that the infringer should have paid the copyright owner for such use during the prior period of up to 3 years.  It is specifically provided that as per § 504,

In any case in which the court finds that a defendant proprietor of an establishment who claims as a defense that its activities were exempt under section 110(5) did not have reasonable grounds to believe that its use of a copyrighted work was exempt under such section, the plaintiff shall be entitled to, in addition to any award of damages under this section, an additional award of two times the amount of the license fee that the proprietor of the establishment concerned should have paid the plaintiff for such use during the preceding period of up to 3 years.

 Id. at § 504(d).

However, as per 17 U.S.C. § 412 statutory damages are not available in certain situations.  § 412 deals with registration as prerequisite to certain remedies for infringement which provides that,

[i]n any action under this title, other than an action brought for a violation of the rights of the author under section 106A(a), an action for infringement of the copyright of a work that has been preregistered under section 408(f) before the commencement of the infringement and that has an effective date of registration not later than the earlier of 3 months after the first publication of the work or 1 month after the copyright owner has learned of the infringement, or an action instituted under section 411(c), no award of statutory damages or of attorney’s fees, as provided by sections 504 and 505, shall be made for—

(1)any infringement of copyright in an unpublished work commenced before the effective date of its registration; or

(2)any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.

 Id. at § 412.

Conclusion

From the foregoing research, it can be found that the copyright owner can claim for copyright infringement either for actual damages including the additional profits made by the infringer with the copyrighted works or statutory damages.  The statutory damages awarded may range from a $750 to $30,000 as the court considers just.  However, if the copyright owner proves that the infringement was willful, the court has the discretion to increase the award of statutory damages up to $ 150,000 and may limit the damages awarded to not less than $200 if the infringer proves that the infringement was not willful.  Moreover, in certain cases, the court may award additional damages to a copyright owner where the infringer takes a defense under section 110(5), and it is proved that infringer did not have reasonable grounds to believe that its use of copyright works were exempted under the section.  In such cases, the court may award additional damages as twice the license fee that the infringer should have paid the copyright owner for such use during the prior period of up to 3 years.

  1. Elements for breach of duty of good faith and fair dealing.

Generally, a duty of good faith and fair dealing is deemed to exist in every contract.  In Donald B. Murphy Contractors, Inc. v. King Cnty., 112 Wn. App. 192 (2002), the Court of Appeals of Washington found that in a contract a duty of good faith and fair dealing, “arises only in connection with the performance of specific contract obligations. If no contractual duty exists, there is nothing that must be performed in good faith.” Id. at 197 (citing Johnson v. Yousoofian, 84 Wash.App. 755, 762, 930 P.2d 921 (1996)).

Also, pursuant to Restatement (Second) of Contracts § 205 (1981), “[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.” Id.

Further, in Keystone Land & Dev. Co. v. Xerox Corp., 152 Wn.2d 171 (2004), the Court of Appeals of Washington has explained that under Washington contract law, “a specific course of conduct agreed upon for future negotiations is enforceable when it is contained in an existing substantive contract.” Id. at 177.  Additionally, the court stated that, “there is no ‘free-floating’ duty of good faith and fair dealing that is unattached to an existing contract. The duty exists only ‘in relation to performance of a specific contract term.’” Id. at 177.

Furthermore, in Badgett v. Sec. State Bank, 116 Wn.2d 563, (1991), the Court of Appeal found that in every contract duty of good faith and fair dealing obligates the parties, “to cooperate with each other so that each may obtain the full benefit of performance.” Id. at 569 (citing Metropolitan Park Dist. of Tacoma v. Griffith, 106 Wash.2d 425, 437, 723 P.2d 1093 (1986)); Lonsdale v. Chesterfield, 99 Wash.2d 353, 357, 662 P.2d 385 (1983); Miller v. Othello Packers, Inc., 67 Wash.2d 842, 844, 410 P.2d 33 (1966).  Further, “the duty of good faith does not extend to obligate a party to accept a material change in the terms of its contract.” Id. at 569 (citing Betchard-Clayton, Inc. v. King, 41 Wash.App. 887, 890, 707 P.2d 1361, review denied, 104 Wash.2d 1027 (1985)).

Additionally, the Court of Appeals found that, “[n]or does it ‘inject substantive terms into the parties’ contract’. Rather, it requires only that the parties perform in good faith the obligations imposed by their agreement.” Id. at 570. (citing Barrett v. Weyerhaeuser Co. Severance Pay Plan, 40 Wash.App. 630, 635 n. 6, 700 P.2d 338 (1985). Thus, the duty arises only in connection with terms agreed to by the parties. See Matson v. Emory, 36 Wash.App. 681, 676 P.2d 1029 (1984).  Also, the court noted that as a matter of law, “there cannot be a breach of the duty of good faith when a party simply stands on its rights to require performance of a contract according to its terms.” Id. at 71. (citing Allied Sheet Metal, 10 Wash.App. at 535-36, 518 P.2d 734; accord Creeger Brick & Bldg. Supply Inc. v. Mid-State Bank & Trust Co., 385 Pa.Super. 30, 560 A.2d 151 (1989)).

Moreover, in Carlile v. Harbour Homes, Inc., 147 Wn. App. 193, (2008), the Court of Appeals explained that the duty of good faith and fair dealing in a contract, “obligates the parties to cooperate with each other so that each may obtain the full benefit of performance. But the duty of good faith does not ‘inject substantive terms into the parties’ contract.’ Rather, “it requires only that the parties perform in good faith the obligations imposed by their agreement.” Id. at 215.  Further quoting that Supreme Court has ‘“consistently held there is no ‘free-floating’ duty of good faith and fair dealing that is unattached to an existing contract”.  Also noted that, “[t]he duty exists only in relation to performance of a specific contract term.” Id. at 216.

Furthermore in Telaya, LLC v. Cruz Estates, LLC, CV-13-5075-RHW, 2013 WL 6049018 (E.D. Wash. Nov. 15, 2013), the Court of Appeals found that in contracts an implied covenant of good faith and fair dealing gives one party discretionary authority to determine a contract term. Id. (citing Myers v. State, 152 Wash.App. 823, 828, 218 P.3d 241 (2009)).  Further, the court found that, “The duty of good faith and fair dealing requires only that the parties perform in good faith the obligations imposed by their agreement.” Id. (quoting United Financial Cas. Co. v. Coleman, 173 Wash.App. 463, 476, 295 P.3d 763 (2012)).  Additionally, the Court of Appeals noted that,“[t]he duty of good faith and fair dealing does not inject substantive terms into the parties’ contract or create a free-floating duty of good faith unattached to the underlying legal document.” Id.  Further, the Court pointed out that, “[t]he duty exists only in relation to performance of a specific contract term.” Id (citing Carlile v. Harbor Homes, Inc., 147 Wash.App. 193, 216, 194 P.3d 280 (2008)).

Conclusion

From the foregoing case laws, it is found that duty of good faith and fair dealing exists in every contract and this obligates the parties to cooperate with each other enabling each to obtain the full benefit of performance.  This duty does not introduce any additional obligations which are not already there in the existing contract.  However, the duty of good faith does not extend to obligate a party to accept a material change in the terms of its contract.  The duty exists only in connection with the performance of specific contractual obligations.

  1. Consequential damages and incidental damages in breach of service contracts. 

In Floor Exp., Inc. v. Daly, 138 Wn. App. 750, (2007), a breach of contract, a party injured may recover all damages that accrue naturally from the breach, including any incidental or consequential losses resulted from the breach.  Id. at 754 (citing Panorama Village Homeowners Ass’n v. Golden Rule Roofing, Inc., 102 Wash.App. 422, 427, 10 P.3d 417 (2000)).  Further, the Court of Appeals explained that the purpose of expectation damages is to “return the injured party to ‘as good a pecuniary position as [she] would have had if the’ breaching party would have performed properly.” Id. at 754. (quoting  Eastlake, 102 Wash.2d at 39, 686 P.2d 465, 470 (1984)).

Additionally, in Brotherton v. Kralman Steel Structures, Inc., 165 Wn. App. 727 (2011), the Court of Appeal found that in Washington, “[c]ontract damages are ordinarily based on the injured party’s expectation interest and are intended to give the injured party the benefit of its bargain.” Id. at 734 (quoting Panorama Village Homeowners Ass’n v. Golden Rule Roofing, Inc., 102 Wash.App. 422, (2000)).

Further, in Rekhi v. Olason, 28 Wn. App. 751, (1981), the Court of Appeal found that other jurisdiction followed the lead of the Restatement of Contracts s 365, Comment d (1932), and have granted damages in addition to specific performance.  The court noted that,

[t]he damages are not awarded for breach of contract, but are awarded so that the purchaser, unable to have exact performance because of the delay, may have an accounting of any losses caused by the delay, so that he can be restored as nearly as possible to the position he would have been in had the seller performed.

Id. at 757 (citing Pearce v. Third Ave. Improv. Co., 221 Ala. 209, 128 So. 396 (1930)).

Further, the Court of Appeal noted that consequential damages should not be awarded in all cases “where a delay in performance has caused inconvenience and some incidental expenses. The award should be left to the equitable discretion of the trial court.” Id. at 758.

Additionally, in Cornish Coll. of the Arts v. 1000 Virginia Ltd. P’ship, 158 Wn. App. 203, (2010), the Court of Appeal explained that, “[b]ecause consequential damages are awarded in addition to specific performance in order to restore the nonbreaching party ‘as nearly as possible to the position he would have been in had the seller performed’ such damages must run from the date at which the contract required performance. Id. at 229. (quoting Rekhi, 28 Wash.App. at 757, 626 P.2d 513 (1981)).  Further, the Court found that, “[c]onsequential damages awarded in addition to specific performance are not awarded for breach of the contract. Rather, they are awarded at the equitable discretion of the trial court in an attempt to make the nonbreaching party whole.” Id.at 228. (quoting Rekhi, 28 Wash.App. at 757, 626 P.2d 513 (1981)).

Conclusion

From the forgoing case laws it is found that in a breach of contract, an injured party may recover all damages arising from the breach as well as any incidental or consequential losses resulted from that breach. Further, in Washington, contract damages are ordinarily based on the injured party’s expectation interest and are intended to give the injured party the benefit of its bargain.