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

from the wonderful dept

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 determining the appropriate amount of the award:

1. The plaintiff’s revenues lost and the difficulty of proving damages.
2. The defendant’s expenses saved, profits reaped, and other benefits from the infringement.
3. The need to deter future infringements.
4. The defendant’s financial situation.
5. The value or nature of the work infringed.
6. The circumstances, duration, and scope of the infringement, including whether it was commercial in nature.
7. In cases involving infringement of multiple works, whether the total sum of damages, taking into account the number of works infringed and number of awards made, is commensurate with the overall harm caused by the infringement.
8. The defendant’s state of mind, including whether the defendant was a willful or innocent infringer.
9. In the case of willful infringement, whether it is appropriate to punish the defendant and if so, the amount of damages that would result in an appropriate punishment.

When calculating the total award, all of these factors should be weighed holistically, in the context of the entire case, to ensure that the overall award is appropriate.

Frankly, that's a pretty good list overall. The fact that it includes whether the infringement was "commercial in nature" also seems like it could be super helpful in getting rid of many of the worst abuses. There are, of course, other potential improvements that can and should be made to statutory damages, but this is a good start, and it's great to see it come from the Commerce Department, that in the past seemed a little too smitten with Hollywood's love of statutory damages.

Separately, the paper also embraces the value of remixes in culture, and why fair use is so important for that to thrive. It doesn't recommend any changes to the law over that (which is too bad), but at least it's not the typical maximalist view of "remixes have no value, or should first be licensed entirely." It does suggest, however, that there be clearer "guidelines" to provide clarity over when fair use should be applied to remixes to at least take away some of the chilling effects of copyright threats.

Remixes make valuable contributions to society in providing expressive, political, and entertainment content. It is important that the copyright framework continues to allow the broad range of remixes to thrive, ensuring that a vibrant fair use space coexists with effective licensing structures. The Task Force concludes that the record has not established a need to amend existing law to create a specific exception or a compulsory license for remix uses. We have several recommendations that would make it easier for remixers to understand when a use is fair and to obtain licenses when they wish to do so. Specifically, the Task Force recommends pursuing three goals:

• The development of negotiated guidelines providing greater clarity as to the application of fair use to remixes;
• Expanding the availability of a wider variety of voluntary licensing options; and
• Increasing educational efforts aimed at broadening an understanding of fair use.

Those are decent recommendations to start with, and again, it's nice to see a real recognition of the importance and cultural value of remixes.

And, finally, the paper looks at the question of digital first sale rights, and whether or not there's a way to "preserve the benefits" of first sale rights (which allow you to, say, resell a book you bought without having to first get approval of the copyright holder). The paper basically says that it's too early to try to change the law on this issue. This may be the only somewhat disappointing aspect of the paper, as it seems to argue the typical maximalist response of "well, new licensing solutions should take care of that." But first sale rights are not just about licensing. And just because there may be easier licensing solutions, you're still creating a permission framework where previously the exchanges were permissionless. And that creates a market friction. However, the paper does recognize that there are some concerns here -- especially from libraries, and recognizes the issue may need to be revisited in the future.

Overall, it's a surprisingly good paper that (not surprisingly) doesn't go as far as I might have liked, but goes much further than I would have expected from the government these days.

Filed Under: commerce department, copyright rolling, first sale, ntia, reform, remixes, statutory damages