Internet Policy Task Force Seeks Changes To US Copyright Statutory Damages Law

The United States Copyright Act should be amended in a “very careful” way to change the way statutory damages are awarded to successful copyright owners against infringing individuals and online services, Shira Perlmutter, US Patent and Trademark Office chief policy officer and international affairs director, said today.

She and John Morris, National Telecommunications and Information Administration associate administrator and internet policy director, unveiled a white paper by the Department of Commerce Internet Policy Task Force (IPTF) which, while proposing legislative changes to the damages provisions, also said no amendments are needed to the measure’s remix and “first sale” clauses.

The report [pdf] follows a July 2013 paper on copyright in the digital economy which comprehensively analysed all the issues and identified topics that still needed to be addressed, Perlmutter said at a press briefing.

The white paper tackles the three policy issues left pending by the earlier report – the legal status of remixes, the relevance of the first sale doctrine in the digital age, and the calibration of statutory damage awards for individuals and online intermediaries, she said.

In addition to legislative recommendations, the document calls for some stakeholder actions and some commitments by relevant government players, all with the aim of finding a balance between strong online intellectual property protections and a vibrant, innovative environment, she said. The paper is the result of extensive discussions with a broad range of stakeholders, she said.

At USPTO, the project was led by Perlmutter, working with a team including David Carson, Susan Allen, Ann Chaitovitz, and Ben Golant. The NTIA team was led by Morris, working with Winter Casey, Camille Fischer, and Luis Zambrano Ramos.

More Consistency in Statutory Damages Needed

Statutory damages may be awarded instead of actual damages to successful copyright plaintiffs, and are figured on a per-work basis, said Perlmutter. They can be lowered where infringement is non-wilful or raised in cases of wilful violations, she said. The IPTF heard that such damages could be excessive in cases involving online services and individual users, and has recommended several cautious amendments to the Act.

One is to incorporate in the law a list of factors to be used to assess statutory damage amounts. Courts around the US have adopted jury instructions containing a variety of factors which the IPTF pulled together into one list, said Morris. The hope is for more uniformity in how judges and juries set such awards, he said. A national set of factors could lead to more appropriate damage awards, he noted.

A second proposal is to remove the existing bar to being able to claim a reduced amount of statutory damages for “innocent” infringements, said Perlmutter. The third recommendation is that in cases where online services are found guilty of massive, non-wilful secondary infringements, courts could be allowed to vary the per-work formula, she said. The task force also wants to see the creation of a small claims tribunal for individual infringers with caps on damage awards.

Remixers Need More Clarity

Remixes are works created by changing and combining existing material to produce new content such as mashups, said Perlmutter. Under existing law, remixes either qualify as fair use or require licences, she said. Stakeholders on all sides agreed that fair use remains appropriate for analysing remixes, so the task force recommended no change to the Copyright Act. However, it did recommend that interested parties set guidelines as to what remixes qualify for fair use protection.

There have been guidelines in the past on when remixes fall under fair use, said Perlmutter. The idea now is to get all interested parties to craft guidelines for courts and users, she said. If people then work within those boundaries, they may be less likely to be sued, she added.

Asked how it will be possible to get feedback from the many people engaged in remixing content at home, Perlmutter said the IPTF got input from organisations that represent home remixers. In addition, the US government has long endorsed wider public education on copyright do’s and don’ts, said Morris.

Digital Copying Not Ripe for First Sale

The first sale doctrine is “very important in our day-to-day lives,” said Morris. It allows someone to buy a book and then give it to someone else without the copyright owner’s permission, or libraries to pay for physical copies of works to lend to users, he said. The big question is whether the doctrine should apply in the digital world, he said.

The IPTF concluded that technology still can’t reliably allow the transfer of a copy of a digital work without leaving a copy in the transferor’s possession, and that therefore the doctrine shouldn’t be expanded to include digital content. However, the task force said it would monitor technological developments.

The House Judiciary Committee has said it’s looking at changes to copyright law, one questioner noted. The IPTF hopes that if and when Congress turns to producing draft legislation it will consider the white paper, said Perlmutter. Task force members will talk lawmakers through the recommendations in detail, she said.

There’s a “broad expectation” that copyright law changes will take place in the next five years, said Morris, adding that the IPTF hopes its recommendation will be important whenever that happens.

[Update:] The white paper’s “detailed analysis of complex copyright policies in the digital age” won praise from David Hirschmann, president and CEO of the US Chamber of Commerce’s Global Intellectual Property Center. It’s “important” that the paper “reaffirmed core copyright principles and a commitment to the free market that supports creators and drives innovation,” he said.

Computer and Communications Industry President and CEO Ed Black called the paper a “step toward copyright common sense.” While recommendations on the reform of statutory damages could go further, they’re a positive step toward ending the “jackpot judgments” that stifle technology investment and innovation, he said.