The damages to you include any lost profits due to the infringement. You can also recover any profits made by the infringer due to the infringement, which are not accounted for by your damages.

However, it can often be difficult to prove how much money you lost as a result of someone’s copyright infringement.  Did the infringing sales cost you sales, and if so how many? How much revenue could you have gotten from licensing the work? The answers to these questions are frequently speculative. That is one reason why the law provides for statutory damages for copyright infringement. Another reason is to deter infringers from violating copyrights even where the damages would be very slight or nonexistent.

Under U.S. law, a victim of copyright infringement may choose to either prove and collect actual damages and profits, or to collect statutory damages.

What Are Statutory Damages?

When the amount of the damages are set by a statute (law), these damages are known as statutory damages. Because the amount is set by statute, the plaintiff does not need to prove that they lost that amount of money in order for the court to award it.

Amount of Statutory Damages for Copyright Infringement

In the case of copyright infringement, the damages are provided for by Title 17, Section 504 of the U.S. Code, which sets forth a range from $750 to $30,000 per infringed work, regardless of the number of times the work was infringed by the defendant.

In other words, if you made 100,000 illegal copies of a single book and sold them, the maximum amount of statutory damages the owner of the book copyrights could recover from you would be $30,000 (in such a case, the owner might choose to prove actual damages instead).  However, if you made one illegal copy of 17 different songs (works), you could be liable for up to $30,000 x 17, or $510,000.

Adjustments for Willful or Good Faith Infringement

In cases of willful infringement, where the infringer knew that the rights to the work belonged to sombody else and knowingly copied and distributed it (or otherwise infringed it) anyway, the maximum statutory damages per work are increased to $150,000.

In cases where the infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the minimum statutory damages are reduced to $200 per work.

Calculation of Damages Within the Statutory Range

The amount of the statutory damages, within the range provided by law, is to be determined “as the court considers just.”  Court cases make clear that this amount should be commensurate with actual damages that may be difficult to prove, taking into consideration the need for a deterrant effect on the infringer.  Statutory damages are not intended to be a windfall or lottery-win for the copyright holder, completely out of proportion with the scope of the actual damages.

An excellent post on Ron Coleman’s Likelihood of Confusion blog discusses this point in more detail. More discussion can be found on the same blog here and here.

Please note that this post was last updated on July 21, 2009, and does not incorporate any changes to the law after that time. Any questions? Anything I left out? Let me know in the comments, please.

Brett does an excellent job of describing fair use, laying out the legal test in language that is easy to understand, and explaining what you can do to lessen the risk of being sued. He also stresses that the issue is, generally, too complex for a layman to analyze on their own with any confidence.

The first thing is to never believe anything about copyright law unless you hear it from a copyright lawyer. Not a regular lawyer, a copyright lawyer…

What is Fair Use?
Sometimes it is permissible to use limited portions of a
copyrighted work, including quotes, for purposes such as commentary, news reporting, scholarly reports… The quoted material, however, must not be unreasonably large and must not destroy the market for the original work (quoting the salacious portions of Monica Lewinsky’s memoirs).

…

In determining whether your copying constitutes “fair use” the courts will look at:

1) The purpose and character of your work-Are you making money from the copies?
2) Nature of copyrighted work-Is it a form book meant to be copied?
3) Amount of work taken-Are you taking 90% of the work or 2%?
4) Economic impact of taking-Are you taking the 2% that makes people want to buy the original (Lewinsky passages)?

…

Large corporations often use a track record of putting infringers out of business to extract settlements. The smartest move for you is to review your copyright material beforehand to check for any potential copyright problems. If you own a business, be sure to include “fair use” policies in your employee handbook. With copyright issues, an ounce of prevention can be worth about seven figures of cure.

There is a lot of other good stuff in the full article. If this interests you, be sure to read it all. Do you know of anyone that got in trouble for copyright infringement or who successfully relied on a fair use defense?  If so, I would like to hear about it in the comments.