The Librarian's Copyright Companion/Chapter 3

by James S. Heller, Paul Hellyer, and Benjamin J. Keele

Chapter Three

Liability for Infringement

Remedies and Damages (Section 504)

3.1. Section 504
Damages

• Actual damages and profits, or
• Statutory damages
  • $750 to $30,000 per infringement
  • $150,000 for willful infringement
  • $200 for innocent infringer
• Remission of damages
  • Employee or agent of a nonprofit educational institution, library, or archives
  • Acting within scope of employment
  • Reasonable belief the use was fair

Remedies and damages for infringement are governed by section 504 of the Copyright Act. In a nutshell, a copyright owner may seek actual or statutory damages, and also try to prohibit the infringing activity.

Actual damages are measured by what was lost as a result of the infringement. Statutory damages can range from $750 to $30,000 per infringing event, and usually will exceed actual damages. If the infringement was willful—if the defendant engaged in the infringing activity knowing that his or her conduct was infringing, or recklessly disregarded the copyright owner’s rights—statutory damages can be as much as $150,000 per infringing act.

These amounts can quickly add up in cases that involve multiple infringing acts, which are becoming more common in the Internet era. In a recent case against a college student who willfully infringed the copyright of thirty songs he downloaded and shared online, the jury awarded statutory damages of $22,500 per song, for a total of $675,000.^[1] The trial judge held that the damage award was so large that it violated the constitution’s due process requirements and reduced the award to $67,500, but the 7th Circuit Court of Appeals disagreed and reinstated the jury’s award.^[2] The amount of the award is stunning considering that the student could have bought the songs for the cost of a few CDs, and it illustrates the power of statutory damages.

But before you start sweating, consider some other aspects of copyright law that work in favor of defendants. Even if a court finds that there was an infringement, statutory damages may be reduced significantly if the defendant was an “innocent infringer,” someone who was not aware of and had no reason to believe that his or her acts were infringing. When this is the case, a court has discretion to reduce statutory damages to as little as $200.^[3]

Furthermore, a court may not assess any statutory damages if the infringer is an employee of a non-profit educational institution, library, or archives who, acting under the scope of his or her employment, actually and reasonably believed that the use was fair under section 107.^[4] Although section 504 does not expressly say so, one might reason that no statutory damages would be assessed against a library employee who believed that the use was permitted under the section 108 library exemption or any of the other statutory exemptions in the Act.

This does not, of course, give library employees a license to copy. The damage remission provision does not apply if the employee knew or should have known that his or her actions were infringing. For example, if a library employee knew she was violating the library’s own policies when she copied material for a patron, it’s unlikely that a court would view her as an innocent infringer.

Plaintiffs in an infringement lawsuit are not interested in getting damages from the person who runs the photocopier, of course. They want a judgment against the organization, which, if it has not already declared bankruptcy due to misconduct by its officers or accountants, has the “deep pockets.” This brings us to the issue of the liability of an employer for the acts of its employees.

Institutional Responsibility: Vicarious Liability and Contributory Infringement

3.2. Institutional Liability

• Vicarious Liability
  • Right to supervise
  • Financial benefit
• Contributory Infringement
  • Knowledge of infringing activity
  • Induce, cause, or materially contribute

Whether a library or its parent institution may be responsible for an employee’s infringement depends on the library’s involvement in the infringing activity, or its relationship to the infringer. The institution may be liable under either of two legal theories: vicarious liability (sometimes called respondeat superior) or contributory infringement.

Vicarious liability generally means that an employer will be liable for harmful acts done by employees who acted within the scope of their employment. A library may be liable for the acts of its employees if it had the right and ability to supervise the employee, and also derived a financial benefit from exploiting the copyrighted work.^[5] Knowledge of the infringing activity is not necessary. The financial benefit is found if the institution is getting something for free that it should have paid for, or even when there is an indirect benefit.^[6]

A library that provides guidance as to which activities are and are not permitted is less likely to be responsible for the acts of its employees. But it will not do the library any good if administrators and staff disregard the policy. The library, or any organization for that matter, cannot enforce its policy with a wink and a nod. This is what happened to the Kinko’s Corporation when it was found liable for employees who photocopied copyrighted articles and book chapters to create coursepacks for students.^[7] Kinko’s had a policy, but failed to enforce it. The court found that Kinko’s used the policy only to “cover” itself. It wrote:

Kinko’s instructions to its workers possessed little of the nuance of the copyright law. They provided no hypothetical situations nor any factual summary of the state of the law presently. …. This can hardly be considered a “good faith” effort on Kinko’s part to educate their employees. To the contrary, it appears more to be a way to “cover” themselves while Kinko’s remained willfully blind to the consequences of their activity.^[8]

Contributory infringement is a little different. A library or its parent institution may be liable as a contributory infringer if it induces, causes, renders substantial assistance to, or materially contributes to the activity.^[9] It doesn’t matter whether the infringer is an employee or someone who walked in off the street. Actual knowledge is not necessary; it is enough if the library should have known that an infringement was taking place. But this doesn’t mean that the library is on the hook if it merely provides patrons with an opportunity to infringe someone’s copyright.

The U.S. Supreme Court has held that manufacturers of video cassette recorders aren’t liable for contributory infringement simply for selling a device that could be used for both legitimate and illegitimate copying.^[10] Likewise, no court would hold that a library is liable for contributory infringement simply because it provides patrons with computers that could be used for both infringing and non-infringing purposes. But if a library posted instructions on how to download pirated music files, it would be liable for contributory infringement because the instructions are clearly for an infringing purpose.

Equipment issues are discussed in greater detail in Chapter Five, but for now we’ll just point out that a library isn’t liable for infringing activities that take place on unsupervised photocopying equipment if the equipment has the following warning label.^[11]

Warning: The Making of a Copy May Be
Subject to the United Stated Copyright
Law (Title 17 United States Code)

It may be prudent to include a similar label on audio listening and video viewing equipment that the library makes available to patrons, such as

Warning: The Making of a Copy and Public
Distribution, Performances or Displays May
Be Subject to the United States Copyright Law
(Title 17 United States Code)

The Bottom Line: A library should give its staff guidance on what they may or may not do. Create a written policy, make sure that the staff is aware of it, and enforce it. Put a warning label on equipment. Do not provide assistance that facilitates copyright infringement.

Statute of Limitations (Section 507)

3.3 Statute of Limitations

• Three years for civil actions
• Five years for criminal actions

The Copyright Act includes a statute of limitations for both civil and criminal actions. In a civil action, a plaintiff must file suit within three years after the claim has accrued, while in criminal cases, the government must start a criminal proceeding within five years.^[12]

That sounds pretty simple at first, but things get more complicated when you need to determine when the clock starts running. In some cases, the infringement is not a single act, but takes place over a period of time. For example, if your library infringed an author’s copyright by keeping her article on the library’s Web site for the past ten years, you can’t use the statute of limitations to shield your library from liability. Because the article has remained on the library’s Web site, the infringement is ongoing.^[13] A more difficult question is whether your library is liable only for damages that resulted during the last three years, or if you’re liable for damages during the entire ten-year period. On this question, courts are split, but most limit damages for continuing infringement to the three-year period.^[14]

There is also some disagreement among courts on how to treat plaintiffs who are unaware of the infringement until after the statute of limitations has run. Some courts say that the clock starts running when the infringement occurs, while other courts say that the clock starts only when the plaintiff learns about, or has reason to learn about, the infringement. If the defendant has done something to conceal the infringement, courts will generally follow the latter approach—the clock doesn’t start running until the plaintiff discovers or has reason to discover the infringement.^[15]

As we noted in Chapter Two, the law regarding continuing infringements is particularly troublesome for libraries because any infringing work in a library’s collection is being distributed on an ongoing basis. If your library has an infringing copy in its collection, it can be held liable no matter how long ago the copying took place, so long as the work itself continues to be protected by copyright.^[16]

Government Immunity

What if the library is part of a federal, state, or local government, such as a city or county public library, a state-funded university library, or a federal agency library? Can the government be liable for acts of its employees? The answer is “maybe.” In some circumstances a government has what is called sovereign immunity, meaning that a copyright owner cannot recover damages from it.

Congress has passed legislation waiving the federal government’s immunity for patent and copyright infringement.^[17] A federal agency, therefore, may be sued for infringing acts committed by its employees. The situation differs for the states, because the Eleventh Amendment to the U.S. Constitution prohibits suits in federal court by an individual against a state without the state’s consent. Congress has passed legislation abrogating Eleventh Amendment immunity, but court decisions have held that the legislation did not validly abrogate a state’s immunity in copyright infringement suits.^[18] Still, a state employee may be sued individually for infringement, may be subject to damages, and may have his or her activities enjoined by a court.^[19]

The Bottom Line: If you work for the government and think your employer has immunity, you could be liable for infringement even though your employer may not.

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1. Sony BMG Music Entertainment v. Tennenbaum, 721 F. Supp. 2d 85 (D. Mass. 2010). Although the case focused on the thirty songs owned by the plaintiff, the defendant had downloaded and shared thousands of other songs as well. Id. at 87.
2. Sony BMG Music Entertainment v. Tenenbaum, 660 F.3d 487 (7th Cir. 2011).
3. 17 U.S.C. § 504(c)(2) (2006).
4. Id.
5. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1022 (9th Cir. 2001).
6. In the Napster case, the court found that Napster reaped a financial benefit when the availability of infringing materials acted as a draw for customers. 239 F.3d at 1023.
7. Basic Books, Inc. v. Kinko’s Graphics, 758 F. Supp. 1522 (S.D.N.Y. 1991).
8. Id. at 1545.
9. A&M Records, Inc. v. Napster, Inc., 239 F.3d at 1019; Cable/Home Communications Corp. v. Network Prods., Inc., 902 F.2d 829, 845 (11th Cir. 1990).
10. Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 442 (1984).
11. 17 U.S.C. § 108(f)(1) (2006).
12. 17 U.S.C. § 507 (2006).
13. Roley v. New World Pictures, Ltd., 19 F.3d 479, 481 (9th Cir. 1994).
14. See 3 Melville Nimmer, Nimmer on Copyright § 12.05[B] (2011).
15. Id.
16. Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199, 203 (4th Cir. 1997).
17. 28 U.S.C. § 1498 (2006).
18. 17 U.S.C. § 511 (2006). Chavez v. Arte Publico Press, 157 F.3d 282 (5th Cir. 1998) and Rodriguez v. Texas Comm’n on the Arts, 199 F.3d 279 (5th Cir. 2000) held that the federal statute did not validly abrogate a state’s sovereign immunity against infringement lawsuits.
19. Redondo-Borges v. U.S. Dept. of Hous. and Urban Dev., 421 F.3d 1, 7 (1st Cir. 2005).