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.

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

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That One Guy (profile) says:

Two and a half out of three

Overall those look like some pretty reasonable recommendations, between moderating one of the more insane parts of copyright law(statutory damages), and recognizing that remixes are a valid form of creativity and there needs to be clearer guidelines to help protect them. The punt on digital first-sale rights is kinda disappointing, but at least they were willing to admit that there was something to be concerned about on the matter, rather than just brushing it aside.

Of course now comes the really fun part, watching the maximalists explode over the ‘weakening of copyright law’ being proposed here. Copyright law is only supposed to go up after all, never down.

Quiet Lurcker says:

Re: Two and a half out of three

>The punt on digital first-sale rights is kinda disappointing, but at least they were willing to admit that there was something to be concerned about on the matter, rather than just brushing it aside.

I would say it’s a LOT disappointing; they could have policies or language that would force the publishers to implement a framework to support the first-sale doctrine. Add provisions that DRM must include a means for the legitimate first purchaser of a copy of a work to be able to permanently disable the putative DRM, and that evidence of a legitimate purchse constitutes an affirmative defense as to accusations of circumvention of DRM provided for in the DMCA.

Of course, this would require truly draconian measures to force the publishers to comply and prevent abuse of copyright by the trolls, but that’s a technical matter.

Mason Wheeler (profile) says:

"Remixes have no value"

If anyone ever tries to tell you remixes have no real value, tell them to go on YouTube sometime and search for “Mark Chesnutt Friends In Low Places”. They’ll find a rather stereotypical sad country song about a guy making an embarrassing social blunder and slinking away to drown his sorrows in whiskey and beer. It would never have been particularly noteworthy, if it hadn’t drawn the attention of an up-and-coming artist by the name of Garth Brooks, who recorded a remix of it.

He kept the basic melody and lyrics exactly the same, but radically altered the tone of the song, turning it from a sad lament to an upbeat, rocking anthem. His version catapulted him to superstardom practically overnight, kickstarting a career that eventually made him the most successful singer in history, and changed the sound of country forever.

Garth Brooks’s Friends In Low Places is considered one of the most culturally significant songs of all time, and it was a remix.

Anonymous Coward says:

…including whether it was commercial in nature.

Originally this was put in to deter commercial tape piracy where counterfeit tapes were sold. It has now been abused to say that ads are commercial benefit. Only ads are very stingy for income, rarely making it worth the effort. But as a weapon to boost the charges, it makes a great club to justify jacking the penalties.

Anonymous Coward says:

What really needs to be changed is the one sided nature of the penalty structure

“This may result from the inherent imbalance in prerequisites for the original complaint and the counter-notice. To get content removed, copyright holder Bob need only claim a good-faith belief that neither he nor the law has authorized the use. Bob is not subject to penalties for perjury. In contrast, to get access to content re-enabled, Alice must claim a good faith belief under penalty of perjury that the material was mistakenly taken down. This allows for copyright holders to send out take-down notices without incurring much liability; to get the sites back up, the recipients might need to expend considerably more resources. Section 512(f) makes the sender of an invalid claim liable for the damages resulting from the content’s improper removal, including legal fees, but that remedy is not always practical.”

Anyone that cares at all for artists should be concerned about the poor poor artist that gets his works falsely taken down at least as much as the privilege holder that gets their works infringed upon.

But of course people like Whatever don’t care at all about artists. He wants a one sided structure that punishes potential infringement a whole lot more than those that falsely take down works. If he cared at all for the artist he would be protesting the current unbalanced nature of the penalty structure so as to be more balanced in favor of artists and not unbalanced in favor of privilege holders. But you will never see him protest this. The truth is that he wants laws that restrict access to user generated content and makes it impossible for artists to get their content distributed without going through a monopoly distributor.

DannyB (profile) says:

Re: Abolish Copyright

It sounds radical. However, copyright was something born when the world was very different.

If there are genuine reasons to preserve copyright, then it should be scaled back drastically. (Lesser of life of author or 50 years.)

And the DMCA needs radical reform to prevent the wide scale abuses seen today.

It needs to be codified into law that nobody except the owner of a copyright is responsible for policing the internet for infringement. It’s not anyone else’s job.

Anonymous Coward says:

so, who do you think will be the first to want to ignore these possible changes? the copyright holder, the artist(s), the members of Congress who are on the take from Hollywood and the entertainment industries or the judges who are equally on the take from Hollywood and the entertainment industries?? lets face it, if the awards drop then so will the back-handers and that definitely wont wash with Congress or the judges!!

Sam Hall is my Chimmny sweep says:

It's no surprise that maximalists are on bored

It’s a proposal that appears reasonable but is really about convincing courts and the public that copywrong maximalism is a reasonable position, it’s a dodge, because they are aware that the agrument against copywrong is very strong that granting monopoly to none productive entites is eithicly wrong, morally wrong and economicly wrong, and they don’t want that position to take even stronger hold than it already has.

That Anonymous Coward (profile) says:

I have a problem with #1
“The plaintiff’s revenues lost and the difficulty of proving damages. “

Much of the difficulty is because rightsholders claims billions without any evidence to support it, beyond their imaginations & fun math, the box office totals don’t support the claims. Then there is the ever popular ‘Hollywood Math’ where a boxoffice blockbuster that took in 500 million, was made for 500,000 still isn’t profitable somehow.

A true fix is to admit that most infringement is non-commercial, despite the **AA’s trying to equate filesharing to an evil conspiracy to destroy a business. Studios aren’t failing because of filesharing but this old wives tale keeps being told, oh our content has no value because filesharing… so why did was so much money spent to acquire the now worthless backcatalog of EMI?

Filesharing is driven by consumers not being able to get what they want when they want at the price they want to pay. Shut up with the they all want it for free, because EVERYONE would take things for free. Read the damn Oatmeal comic about trying to get Game of Thrones legally and see all of the hurdles put in the way to stop someone from paying them because some 1950s business model refuses to adapt to reality.

If the “reward” for ignoring consumers dropped to a multiple under 10 x retail cost, they might have a reason to make things available when customers want to pay them. It they spent less on trying to dictate the 1000 rules on paying customers to keep the illusion of control, and spend all of that cash on providing the best service that money could buy they would make even more cash.

They focus far to much on chasing those who they imagine owe them money while shitting on the people willing to pay them. In the real world if you provide a shitty service to your paying customers, you go out of business.

#5 ” The value or nature of the work infringed. “
Which is a real handy way to say that its unfair porn studios are raking in this cash while we can’t figure out how to. How many studio execs are slamming their heads on their desks looking at the millions Prenda pulled in from 1 shitty old porn wondering why they can’t do it with blockbusters. They miss the idea that “The Hurt Locker” doesn’t have the same shame power as “Barely Legal Lolitas Anal Adventures 17” in obtaining quick settlements.

Whatever (profile) says:

The list is pretty difficult to deal with, because it adds a number of items on the list which would vary the punishment based solely on a person or company’s bank account, and not the severity of their crime.

A rich person pirates a song, they could be looking at a huge cost. A poor person does the same, and they maybe have to pay $1. Is that really justice? Justice is suppose to be blind, and not to waver based on social standing or the size of your bank account. Taking the “he defendant’s financial situation” means that a poor person could be the biggest pirate in the world, and suffer a smaller penalty than a rich person who shared a single video or tv show. Is that really fair?

Punishment should fit the crime, not the criminal.

Anonymous Coward says:

Re: Re:

Sounds exactly like the system we have now – if you’re rich and/or famous, most people will leave you alone. If you’re poor, you’ll get bled out of every dollar paying settlement money to go away or via an expensive lawsuit before plaintiffs decide it’s either not worth the bad PR or the judge can decide they don’t actually have a case. If you’re middle class – well, that’s exactly the system we have now; copyright trolls will demand that you prove yourself to be capable of getting extorted.

Never mind the fact that plaintiffs might not even have the right person, but that doesn’t seem to have bothered you.

Anonymous Coward says:

Re: Re:

A false takedown directly harms artists. Infringement indirectly ‘harms’ privilege holders (or denies them an unowed privilege).

If you actually cared for artists you would logically advocate that artists (who falsely have their works taken down) receive at least the same protections that privilege holders receive (ie: a more balanced penalty structure). But you don’t care at all for artists which is why you don’t advocate for such.

So, once again, answer my question. Do you think artists (who have their works falsely taken down) should receive at least the same protections as privilege holders?

Answering this question puts you in a tough position. Logically, if you cared for artists you would answer yes. But you refuse to advocate for laws/policies that go against your true agenda (protecting the distributor) so you refuse to answer yes. Answering no would more directly expose the fact that you don’t care for artists but are more interested in the distributor. But you don’t want to admit to this truth either because that would undermine your efforts to lie to us about how much you care for artists in an attempt to ostensibly justify bad laws intended for the distributors.

Not answering the question is your best option but that’s not a good option either because it, too, although slightly more indirectly, reveals you for the liar you are. The most logical reason why you continuously refuse to answer the question is because of the above stated dilemma.

So, Whatever, what do you have to say for yourself? Are you proud of the fact that you have been exposed as the fraud that you are (the fraud that everyone already knew you are). Do you even have enough of a conscience to care that you’ve been exposed as a fraud? Do you even have enough of a conscience to care about the fact that you are a fraud and I have openly stated and made clear the root of your petty psychology in your refusal to answer my question?

Anonymous Coward says:

Re: Re:

“Is that really fair?”

I would argue it is fair. $10 to a poor person is a much greater punishment than a rich person. Both should receive equal punishment within their means so they can both be equally dissuaded from committing the act again.

The rich person can still purchase more copies of the song. They can still purchase more cars. More houses, more goods and services on the free market. But they shouldn’t be allowed to get away with breaking the law more times just because they can better afford to pay the fines. They work hard to get rich not so that they can better afford to break the law. They work hard to get rich so they can afford more stuff within the law. When it comes to breaking the law this idea of capitalism, where rich people get to do it more because they can better afford it, is not acceptable. Capitalism encourages people to work hard and take well thought out risks and make well researched investments to get rich so that they can better receive the benefits of capitalism (goods and services) within the law. Their reward is more goods and services within the law. It’s not the ability to be able to better get away with breaking the law because they can afford it. When it comes to breaking the law capitalism shouldn’t be the model to follow. People with money should be forced to pay more.

That Anonymous Coward (profile) says:


There is an icelandic country where the speeding tickets work on a scale based on income.

You decry a rich person perhaps paying more than a poor person. It is more a matter of making the ‘punishment’ more fitting. Donald Trump can easily afford to wipe his ass with $100 bills, to a poor person $100 might mean not eating that month… do you see that while its the same amount of money the impact to each is far different.

The world doesn’t really work on one size fits all. It is not justice to have someone needing to seek out a food pantry because of 1 song while a rich person just pulls out another $100 to wipe with.

Please extol the severity of the crime of 1 person downloading 1 song. Please explain the huge damages you think this causes, because I want to understand the delusional position you are coming from. (Also be forewarned I will trot out the “punishment” the labels paid in Canada when they committed COMMERCIAL copyright infringment and then were mad that they were expected to be fined on par with filesharers they pursed who didn’t profit like the labels did.)

Understand that the **AA’s have been working hard around the globe to make “piracy” a jailable offense with longer sentences than crimes that actually harm another person, so you are working at a deficit trying to make people see the “crime” as being that serious.

That One Guy (profile) says:


A rich person pirates a song, they could be looking at a huge cost. A poor person does the same, and they maybe have to pay $1. Is that really justice?

Whereas currently the situation is:

A rich person pirates a song, and assuming they go to court at all they could be looking at a fine that’s barely pocket change to them. A poor person does the same, and they are faced with a fine large enough to bankrupt them ten times over.

As you yourself ask, ‘Is that really justice?’

Ninja (profile) says:


Punishment should fit the crime, not the criminal.

Precisely. Which is baffling when you see that if you actually steal entire physical copies (CDs) you will be facing fines that are several hundreds of times lower. So the paper in this regard does make a good work.

And sometimes it must fit the criminal yes. If somebody evades taxes in the millions said person should pay in the millions, if it’s the poor guy evading in a few thousands then he should pay accordingly. And the punishment should never be enough to destroy the life of the punished.

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