Monday, June 16, 2008

Post-Registration Statutory Damage Awards

Section 412 of the Copyright Act acts as a brake on statutory damages awarded under Section 504(c). Section 412(2) bars an award of infringement for

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.

For United States works, since registration is a prerequisite to protection, it happens on occasion that acts of infringement occur both before and after registration. Section 412, however, is unrelenting: if the copyright owner doesn’t register before any act of infringement occurs, no statutory damages may be awarded, period. Since its inception, plaintiffs who have run afoul of Section 412 have attempted to get around it without success. The Ninth Circuit had not addressed the provision in the context of post-registration infringement until this month, in Derek Andrew, Inc. v. Poof Apparel Corporation, 2008 WL 2357378 (9th Cir. May June11, 2008)(No. 07-35048).

The suit involved a backdoor effort to stop defendant from selling lower-priced versions of plaintiff’s (uncopyrightable) clothes though infringement of a hang-tag affixed to that clothing. As described by the court, “Poof’s hang-tags nearly are identical to Andrew's ‘Twisted Heart’ hang-tags, the only difference being the word ‘Poof!’ in place of the words ‘Twisted Heart.’” After a cease-and-desist letter was sent, Poof is reported to have comply with plaintiff’s demands, but “failed to remove the garments bearing the infringing hang-tag from stores.” Plaintiff sued, defendant defaulted on liability, and a bench trial on damages took place. The trail judge awarded plaintiff $15,000 in statutory damages because Poof distributed clothing bearing the infringing hang-tag after the effective date of the registration. Poof appealed.

In reversing, the court of appeals looked to other court opinions and what it perceived to be the purposes of the statute: (1) “to provide copyright owners with an incentive to register their copyrights promptly; (2) to “encourage[] potential infringers to check the Copyright Office's database. The first stated purpose is dead-on; the second seems questionable. What would one be encouraging potential defendants to check the Office’s records for? In Poof’s case, there was no doubt who owned the work. In most cases there isn’t. The record checking rationale would only apply in those few cases where infringement turns on an ownership dispute, but even in those cases, since the Copyright Office is an office of record only, the presence of another claim of ownership does not mean the claim is ultimately valid.

In any event, the court held, correctly

[W]e join those circuits that addressed the issue before us and hold that the first act of infringement in a series of ongoing infringements of the same kind marks the commencement of one continuing infringement under § 412. This interpretation, we believe, furthers Congress' intent to promote the early registration of copyrights.

This conclusion rightly led to vacation of the award. Savvy readers might say, but didn’t it cost more than $15,000 to prosecute the appeal? Indeed, but defendant also got the attorney’s award vacated, and award that was much higher than the statutory damages award.

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