Request for multiple statutory damages award denied

United States of America
In Tu v TAD System Technology Inc (Case 1:2008cv03822, September 9 2009), the US District Court for the Eastern District of New York has held that a plaintiff is not entitled to multiple statutory damages awards for violations of the Copyright Act, the Digital Millennium Copyright Act (DMCA) and the Lanham Act
Plaintiffs Harry Tu and Aldelo Systems Inc filed a complaint against defendants TAD System Technology and Andy Wong alleging that the latter produced an unauthorized derivative work of the plaintiffs’ software program. The plaintiffs claimed that the defendants sold and distributed the pirated software by sending emails to Aldelo’s authorized distributors and by advertising on various internet blogs. According to the complaint, these activities constituted copyright infringement and counterfeiting, and violated the DMCA.
The defendants failed to answer the complaint and the court entered a default judgment. Subsequently, the plaintiffs moved for awards of statutory damages. They specifically asked for damages for violations of each claim - copyright, DMCA and trademark. In total, the plaintiffs requested $6,152,500 - namely:

  • $150,000 under the Copyright Act for wilful infringement;
  • $2,500 under the DMCA; and
  • $6 million under the Lanham Act for counterfeiting. 
According to the court, statutory damages serve a dual purpose: “to compensate the copyright owner and to deter potential infringers”. The court declined to award duplicate statutory damage awards in this case for two reasons:
  • Awarding damages under different legal theories “fails to serve the first aim, as compensation for the same injury could be and should be accomplished under a single grant of statutory damages”; and
  • “[T]he broad range of statutory damages available under either the Copyright Act or the Lanham Act is sufficient to put potential infringers on notice that it costs less to obey intellectual property laws than to violate them.”
The court then found that the essential element of the case was the defendants’ violation of the Copyright Act. Thus, the damage award was to be determined under the copyright laws.
The court awarded the maximum statutory damages under the Copyright Act - $150,000 - because the defendants had acted wilfully. The court stated that the defendants had “sneered in the face of the plaintiffs’ copyright and intellectual property”. The court also entered a permanent injunction and awarded $24,279.31 in attorneys' fees. It declined to order the destruction and impoundment of the defendants’ equipment related to the reproduction of the software, since the permanent injunction prohibited the defendants from selling the pirated program.
In declining to issue multiple statutory damage awards, the Eastern District of New York has taken a position opposite of that taken by the Ninth Circuit, which has awarded duplicative statutory damages under the Copyright Act and the Lanham Act (see Nintendo of America Inc v Dragon Pacific International).

Leigh Ann Lindquist, Sughrue Mion PLLC, Washington DC     

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