Your company, ABC, Inc., has spent a lot of money developing its website. The site contains detailed descriptions of ABC's products. The descriptions are effective: sales have increased dramatically. Your competitor, XYZ, Inc., gets wind of your success; and just 4 months after your website has "gone live" on the Internet (i.e., been published), XYZ starts copying many of your product descriptions for its own website. In some cases, whole paragraphs are copied; in others, only sentences.
You describe XYZ's actions to ABC's lawyer, and ask if ABC has a claim for copyright infringement. He says it might, depending on the answers to certain questions. He asks you several, including: who actually prepared the excerpts in question? You answer an ABC employee acting within the scope of her employment. He says, "Good. That makes the excerpts ‘work made for hire' under Federal copyright law - which in turn means that ABC, the employer, is deemed the ‘author' and ‘owner' of the work, allowing it to sue for infringement."
He also asks you if ABC has "registered the work." You say no; in fact you don't even know what that means. He tells you that although registration is not required for the existence of a copyright (it arises when the work itself is created and put in tangible form), registration is critical for litigation. He also tells you registration is a simple and inexpensive process. To have a published work "registered" with the U.S. Copyright Office, three items must be filed together: (1) a completed application form, which may be obtained online; (2) two copies of the completed work; and (3) the $45 filing fee. Registration is normally deemed effective as of the date the Copyright Office receives all 3 items. He advises you to be sure to register changes to the existing website, including new webpages, because they will not be covered by any prior registration.
A. Registration as Prerequisite to Lawsuit
The significance of registration to litigation is two-fold. First, as a general rule, no suit for copyright infringement may be brought until the work in question has been registered. So, for example, if ABC wanted to seek an immediate injunction against XYZ, it couldn't - until it got the work registered.
Often as a precursor to a lawsuit, counsel for the copyright owner will send the infringer a "cease-and-desist" letter, in the hope that the infringer will relent and suit will be avoided. But if the work in question hasn't yet been registered, the force of any such letter may be dramatically lessened, if not negated altogether. The infringer needs to know that if he doesn't comply with the letter, the next thing he'll receive is a Federal Court complaint for copyright infringement. But no suit should be threatened before the work is registered. And if no suit is threatened, the infringer might assume that the "cease-and-desist" letter is merely "smoke," which will never be followed by the "fire" of a lawsuit.
B. Registration as Prerequisite to Statutory Damages and Attorneys' Fees
A second benefit to registration is that it gives the copyright owner of a published work the right to seek "statutory damages" and attorneys' fees under the Copyright Act. These are two "big sticks" for litigation. But they're available for a published work only if it's registered either (a) before the infringement commenced, or (b) within 3 months after the first publication of the work. 17 U.S.C. §§411 and 412.
1. Statutory Damages
Statutory damages are a form of monetary remedy. The reality is that it's often hard to prove any actual economic damages at all from copyright infringement, let alone sizeable damages. Although it may be relatively easy to get an injunction against the infringer - that is, a court order that prohibits him from further infringement - it may be far harder to prove actual economic damages. Given that reality, the law provides the alternative monetary remedy of statutory damages. The amount is prescribed by statute, ranging from $750 to $30,000. In the case of willful infringement, the high end increases to $150,000. So, when statutory damages are available, the copyright owner may elect between them and actual damages. If the latter are unascertainable or negligible, then statutory damages are a welcome alternative.
In the case of the ABC website example, above, statutory damages will not be available because the work wasn't registered either (a) before XYZ's infringement commenced or (b) within 3 months after the first publication of the work. So, if ABC can't prove any actual economic damage, it will have to be satisfied with an injunction as its only remedy. Although an injunction is vitally important, ABC will be understandably frustrated that it can't get any money damages for XYZ's infringement. Only intensifying this frustration, moreover, will be the fact that ABC would have had a good chance to recover for a willful violation, because XYZ was copying entire paragraphs. If the court found willfulness, it could then have increased ABC's statutory damages to as much as $150,000.
2. Attorneys' Fees
As to attorneys' fees, the general rule in the U.S. is that each side pays its own. But the Federal Copyright Act creates an exception: it authorizes a court to grant attorneys' fees to a prevailing party. However, there's an exception to this exception: a court may not award attorneys' fees to a prevailing copyright owner of a published work if it wasn't registered either (a) before the infringement commenced, or (b) within 3 months after the first publication of the work... See 17 U.S.C. §§411 and 412. Again, in the case of the ABC website example, above, attorneys' fees will not be available because the work wasn't registered by either of the two deadlines.
C. Summary
As a general rule, no suit for copyright infringement may be brought until the work in question has been registered. As to the availability of statutory damages and attorneys' fees, the effects of timely registration may be summarized as follows. If a copyright owner registers his work within 3 months after its first publication, statutory damages and attorneys' fees will be available against any post-publication infringement - even one that commences before the registration. But if he registers it after this 3-month grace period, they will be available only if the infringement commences after the registration. For example, if he registers the work in the fifth month after the first publication, and the infringement commences in the sixth month, statutory damages and attorneys' fees will be available. But if he registers in the fifth month, and the infringement has already commenced in the fourth month, statutory damages and attorneys' fees will not be available.
Absent timely registration, a copyright owner's remedies will be confined to injunctive relief and actual damages. Although injunctive relief is important, it's non-monetary. And although actual damages may be satisfactory, they're often not - because they can be hard to prove. Since registration is a prerequisite to litigation in any event, and since a copyright owner never knows when an infringement may commence, it behooves him to register his work as soon as possible. Timely registration pays.
This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. Your receipt of Good Company or any of its individual articles does not create an attorney-client relationship between you and Sheehan Phinney Bass + Green or the Sheehan Phinney Capitol Group. The opinions expressed in Good Company are those of the authors of the specific articles.
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