"In contrast to previous economic eras,
intellectual property will be the primary source
of new wealth in the 21st century."
- Gregory A Piccionelli, 1989
 
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Successful Enforcement Of Your Copyrights Often Depends On Early Filing Of Copyright Registrations

SEPTEMBER 2008

Rampant online piracy has become the bane of adult content producers and distributors. In fact, as we approach the end of the Bush Administration, dealing with the reality of copyright infringement has become a much greater day-to-day concern than the threat of governmental prosecution for most industry participants. As a result, more and more owners of adult content rights have become interested in how to use every legal advantage available to them to effectively battle the pirates.

 

 

One such legal advantage is the use of special enforcement provisions available under the Copyright Act to copyright owners that promptly register the copyrights in their content with the Copyright Office. These provisions allow the copyright owner to collect “statutory damages”, and attorney’s fees in copyright infringement cases. These are powerful remedies and, as discussed below, the question of their availability can determine whether a lawsuit against an infringer is even worth filing.

 

The Importance of Statutory Damages and Attorney’s Fees in Copyright Cases.

 

Under United States copyright law, copyrights are instantly obtained by the author of a work the moment the work is “fixed in a tangible medium of expression”. This means, for example, that the moment a photograph is taken or a scene is recorded on tape, the resulting work has been “fixed in a tangible medium” (e.g, on film, tape or in digital memory) and from that moment forward is a work subject to copyright protection.

 

While our copyright law streamlines the process for obtaining copyright protection, the process of enforcing the copyrights obtained is quite a different matter. It is when a copyright owner seeks to enforce the rights in a protected work that the special benefits of early registration become clearly, and for some, painfully apparent. The following two scenarios show why this is the case.

 

Scenario #1: Copyright owner does not promptly register a work that is subsequently infringed.

 

When someone rips off a copyright owner by unlawfully duplicating or distributing the copyright owner’s work or an unauthorized derivative work made from the original, the owner can sue to obtain an injunction to stop the infringement and collect damages from the infringer. The damages can be what the infringer profited and the monetary damage caused to the owner as a result of the infringement (“actual damages”).

 

But let’s suppose, in our first scenario, that a copyright owner had not previously registered the work that is subsequently discovered to be infringed by an online pirate. This is a very common situation as the overwhelming majority of adult content producers unfortunately still do not make it a practice of promptly registering their works with the Copyright Office.

 

In addition to the lack of early registration, let’s also assume a couple of additional facts that are also very common when it comes to infringement of adult content providers’ works. First, let’s assume that the work at issue has been distributed by the legitimate owner for some significant period of time prior to the commencement of the infringement, say six months or more. Let’s also assume that the infringement of the work has also been ongoing for a while, say at least two months prior to the time the owner discovered the theft. Under these facts, the copyright owner has the right to sue for damages and obtain an injunction preventing further infringement.

 

But under the facts of our first scenario, the copyright owner does not have the right to be awarded attorney’s fees that are incurred to stop and redress the piracy. This is an important, if not critical economic factor that often determines whether a copyright owner even decides to bring a lawsuit against the wrongdoer. The reason is simple, the attorney’s fees required to prepare, file and prosecute a copyright lawsuit are substantial. Even the simplest infringement lawsuit, if taken to trial, can run up lawyer fees in excess of $100,000. Since copyright infringement lawsuits generally are not filed unless the owner can reasonably hope to collect more from the infringer than what is spent trying, the unavailability of attorney’s fees often dissuades adult content owners from enforcing their rights unless the case offers the prospect of collecting relatively large sums of money as damages from the infringer.

 

Unfortunately, compounding the problematic economics is the fact that the content owner in our first scenario is only entitled to the actual damages that the copyright owner can prove are the result of the infringement. This is also usually an expensive endeavor that can easily cost tens of thousands of dollars in attorney’s fees and associated costs, such as accounting expenses and expert witness fees. Add to all this the fact that a typical infringer will not have profited, and a typical owner will not have lost, more than the anticipated litigation costs to resolve the matter, and you can quickly see why online infringement of adult content is goes virtually unchecked.

 

Conclusion regarding Scenario #1, late registration: not good.

 

Scenario #2: Copyright owner promptly registers a work that is subsequently infringed.

 

In our second scenario, the copyright owner promptly registers the copyright in the subject work (1) within the first three months following the copyright owner’s first publication of the work or (2) at least prior to the time that the pirate started to infringe the work in question.

 

Under these circumstances, the Copyright Act entitles the owner of a registered copyright to elect to recover statutory damages for infringement instead of actual damages, which, as indicated above can be costly to prove. Moreover, the early registration of the copyright in the subject work also entitles the owner to seek the recovery of attorney’s fees expended in prosecuting the lawsuit.

 

This means that without having to prove that the pirate profited a dime, or that the owner lost money resulting from the infringement, the copyright owner can obtain money damages in the amounts provided by statute (the Copyright Act), hence the term “statutory damages”.

 

Fortunately for the copyright owner, statutory damages can be substantial. For example, the court could award statutory damages in an amount up to $150,000 per infringement of the registered work in cases of willful infringement, such as where the infringer knew or should have known that the infringer did not have the right to exploit the work.
Since most infringement by pirates involves a plurality of the adult content owner’s works, if the material has been promptly and properly registered to maximize statutory damages, a typical infringer often can face potential statutory damage awards in excess of a million dollars.

 

But there’s more . . .

 

In addition to the availability of potentially huge statutory damage awards, a prompt registration of the copyright in a work also entitles a copyright owner to seek a court-ordered reimbursement of the owner’s attorney’s fees expended in the process of enforcing the owner’s copyrights against the infringer.

 

Now we’re talking. Adding the one-two punch combination of the availability of statutory damages and attorney’s fees to the owner’s enforcement options will likely make all the difference in the world in the calculation of whether an online rights enforcement action will be economically reasonable to undertake. More often than not it will be, and more often than not the pirate will know this as well. As a result, the matter is more likely to settle early, possibly without even the filing of a complaint.

 

Conclusion regarding Scenario #2, prompt registration: very good.

 

A Simple Lesson For Content Owners: Register Your Copyrights Sooner Rather Than Later To Maximize Your Ability To Protect Your Rights.

 

If you are a content producer and I have not yet convinced you that you should spend the small fee per work to file copyright registrations for all your works (currently $45 per hard copy application per work), then consider the following case handed down by the Ninth Circuit Court of Appeals that clearly teaches the lesson that you should file your copyright registrations early or be prepared for the unpleasant consequences of your delay.

 

To put this lesson in context, let’s look at another common scenario faced by numerous adult entertainment companies battling piracy of their content.

 

Scenario #3: Discovery of infringement prompts subsequent registration of the copyrights in the infringed works more than three months after the owner first published the works.

 

This scenario is rapidly becoming the most frequent I encounter in situations where an adult entertainment company has decided to “get serious” about protecting its copyrights. Basically the timeline of events goes something like this:

 

(T1) The content owner starts distributing works online or in hard copy, but no copyright registration for the works is filed.

 

(T2) Several months (three months or more) or even years after the content owner first publishes the content, a party pirates it and begins to distribute it online or elsewhere without authorization.

 

(T3) Some time thereafter, the content owner discovers the infringement and registers the work(s) being infringed with the Copyright Office and demands that the wrongdoer stop the unauthorized distribution of the owner’s content.

 

(T4) The pirate ignores the demand, the infringement continues unabated, and the content owner wants to, among other things not mentionable here, “sue the pirate’s ass off” to stop the infringement.

 

(T5) The content owner seeks the assistance of a qualified adult entertainment intellectual property attorney to discuss the company’s options.

 

At the end of the timeline above an honest and experienced attorney should dutifully inform the content owner about the attorney costs and difficulties associated with bringing a case for which statutory damages and attorney’s fees are not available. At this point the owner may volunteer that he or she “has heard” that because they registered their copyrights in the infringed work(s), their company is supposed to be able to obtain hundreds of thousands of dollars in statutory damages because the infringement is continuing after registration, and they are also supposed to be able to recover their attorney’s fees. If the attorney and would-be client are considering bringing an infringement case in the areas of the U.S. covered by the Second, Fourth, Fifth, Sixth or Ninth Circuit federal appeals courts (encompassing 24 states, including New York and California) the attorney should disclose to the client’s that his or her understanding is, unfortunately, incorrect.

 

The scenario involves the question of whether ongoing intentional and willful infringement that started before the owner registered the copyright in the infringed work but continues after registration could be viewed as infringement that subjected the infringer to statutory damages and attorney’s fees for that part of the infringement that occurred after the date the owner registered the copyright. This question, surprisingly, has not been dispositively dealt with by the United States Supreme Court or by all of the circuit courts. As a consequence, many practitioners have opined that post-registration infringement may subject the infringer to statutory damages and attorney’s fees awards regardless of whether the ‘new’ infringement was a continuation of a pre-registration infringement. Most practitioners adopting this view relied on the fact that one very important circuit court, the Ninth Circuit, which encompasses the huge copyright producing states of California and Washington (films, music, software, etc.) had not weighed in on the matter.

 

All that changed, however, when earlier this year in the case of Derek Andrew v. Poof Apparel, 528 F.3d 696, (9th Cir. 2008), the Ninth Circuit Court of Appeals joined the Second, Fourth, Fifth and Sixth Circuit courts in barring statutory damages for ongoing infringement that occurs both pre- and post-registration of the subject work.

 

In the above-cited case, plaintiff, Derek Andrew, Inc. (“Derek”), accused Poof Apparel Corp. (“Poof”), of copyright and trademark infringement relating to its garment hang tags. The District Court awarded default judgment against Poof, along with statutory damages and attorneys’ fees. On appeal, the Ninth Circuit reversed the District Court’s $15,000 statutory damages award and the order for Poof to pay Derek’s attorney’s fees because the infringing activity was deemed to have commenced before the effective registration date of the copyright at issue.

 

In reaching its decision denying Derek’s right to statutory damages and attorney’s fees, the Court cited what it viewed as the two fundamental purposes of the part of the Copyright Act granting the availability of statutory damages and attorney’s fees: (1) to provide an incentive for copyright owners to register their copyrights promptly; and (2) to encourage potential infringers to check the Copyright Office’s database prior to use of works not owned.

 

Derek had waited almost two years to register its copyright, and when it did it was after Poof started infringing Derek’s copyright. As a result, the Court noted that if Poof had searched the Copyright Office’s database before launching its hang-tag design, it would not have found Derek’s design.

 

The lesson from this case is simple: copyright owners should promptly register their copyrights with the U.S. Copyright Office. Failing to do so will preclude the owner from obtaining statutory damages and attorneys’ fees from those infringers who began infringing prior to registration, even if they blatantly continue infringing after registration. Copyright enforcement is difficult enough in the digital era. It makes little sense for a copyright owner to make it more so by voluntarily relinquishing powerful remedies by failing to do something as simple and inexpensive as filing copyright registrations.

 

At the time of this writing there are 158 days, 21 hours and 41 minutes left in the Bush Administration.

 

Gregory A. Piccionelli, Esq. is an Internet and adult entertainment attorney. He can be reached at Piccionelli & Sarno at (310) 553-3375 or at greg@piccionellisarno.com.

 

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