Commerce Department Wants To Fix Some Of The Worst Problems Of Copyright Law: Reform Crazy Damages

A couple of years ago, the Commerce Department put out a somewhat problematic "Green Paper" on copyright, that at times seemed to have been pretty heavily influenced by the maximalist view of the world, without recognition of how widely copyright is abused. Lots of people responded to it with their concerns -- including an excellent response from (believe it or not) Hollywood screenwriters who actually pointed out the problems of copyright maximalism, statutory damages, abusive takedowns and attacks on fair use. I don't know if it was that letter that really influenced things, but the Commerce Department has now come out with its follow up "White Paper" and it's really quite good. It basically says that copyright's statutory damages are a huge mess and need to be fixed. We've argued in the past how statutory damages are a big part of the reason why copyright law is so messed up. If you don't know, copyright law allows rightsholders to ignore actual damages (especially if they don't exist) and elect to go for "statutory damages" in which they can seek $750 to $150,000 per work infringed. And, of course, they always claim to go for the $150,000. And when you're talking about someone non-commercially sharing, say, 20 songs, and the fact that they could suddenly be on the hook for $3 million, it begins to be clear how copyright law seems totally divorced from reality. Those crazy statutory damages have a number of super damaging effects:

1. Massive chilling effects. Any hint of a lawsuit gets people to back down as the damages can be debilitating, even if there was no actual damage.
2. Copyright creep. People use copyright threats for reasons having nothing to do with actual copyright, such as to censor content they don't like, because they know that threat of statutory damages is so powerful.
3. Parasitic and abusive businesses, such as copyright trolling, which heavily relies on the threat of $150,000 in statutory damages per work to extort money from individuals.

Thankfully, there's been at least some recognition in Congress that maybe it's time to revisit statutory damages, and this new white paper from the Commerce Department should be quite helpful on that front. What's slightly amazing, honestly, is that some of the folks involved in the writing of the paper actually include some fairly well-known copyright maximalists, who have historically always pushed for expanding copyright law and been against fixing statutory damages. In this paper, they don't ask for a total overhaul of statutory damages, like many of us feel would be appropriate, but still do push for reforms that recognize the widespread abuse and chilling effects of statutory damages (the paper even namechecks Righthaven and Prenda Law as examples of abusing statutory damages for copyright trolling). Key reforms the paper supports include expanding eligibility for "innocent infringement," which greatly lowers the statutory damages. Historically, courts almost never allow innocent infringement defenses. Expanding that would help out many cases of blatant trolling. But the big change is giving the courts much more discretion in determining the proper amounts for statutory damages, including a specific list of factors that judges and juries should be tasked to consider before determining an award -- and that includes both actual losses to the copyright holder and the "benefits" to the infringer.

The Task Force recommends that Congress enact a new paragraph in Section 504 of the Copyright Act specifying factors that must be considered when determining statutory damage award amounts. The aim is to ensure a greater degree of predictability in copyright infringement cases across the country and address some other concerns raised in this proceeding. In considering what factors should be included, we have drawn upon existing model jury instructions as well as federal case law. The Task Force considered proposing federal model jury instructions, but concluded that a statutory set of factors would be preferable since they will be binding on all courts. We believe that litigants and courts would be well-served by requiring consideration of a uniform set of factors designed to result in an appropriate award based upon the facts of each case. The nine factors listed below are those that will most often be applicable in a statutory damages determination. We believe that they should be non-exclusive, so that courts are not foreclosed from considering other factors that may be relevant in a particular case. The Task Force proposes a new clause in subsection Section 504(c)526 as follows: FACTORS TO CONSIDER -- In making any award under this subsection, a court shall consider the following nonexclusive factors in determin