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86th Congress} 2d Session COl't'IMITTEE PRINT COPYRIGHT LAW REVISION STUDIES PREPARED FOR THE SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS OF THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE EIGHTY-SIXTH CONGRESS, SECOND SESSION PURSUANT TO S. Res. 240 STUDIES 22-25 23. The Operation of the Damage Provisions of the Copyright Law: An Exploratory Study Printed for the use of the Committee on the Judiciary UNITED STATES GOVERNMENT PRINTING OFFICE 1\91j~i WASHINGTON: 1960 COMMITTEE ON THE JUDICIARY JAMES O. EASTLAND, MissIssippI, Chairman ESTES KEFAUVER, Tennessee ALEXANDER WILEY, WIsconsin OLIN D. JOHNSTON, South Carolina EVERETT McKINLEY DIRKSEN, Illlnois THOMAS C. HENNINGS, JR., MissourI ROMAN L. HRUSKA, Nebraska JOHN L. McCLELLAN, Arkansas KENNETH B. KEATING, New York JOSEPH C. O'MAHONEY, Wyoming NORRIS COTTON, New Hampshtre SAM J. ERVIN, JR., North Carolina JOHN A. CARROLL, Colorado THOMAS J. DODD, Connecticut PHILIP A. HART, Mtchlgan SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS JOSEPH C. O'MAHONEY, Wyoming, Chairman OLIN D. JOHNSTON, South Carolina ALEXANDER WILEY, WIsconsin PHILIP A. HART, Michigan ROBERT L. WRIGHT, Chief Counsel JOHN C. STEDMAN, Associate Counsel S~EPHEN G. H,uRER, Chief Clerk II For sale by the Superintendent of Documents, U.S. Government Printing Office Washington 25, D.O.· Price 45 cents FOREWORD This committee print is the eighth of a series of such prints of studies on Copyright Law Revision published by the Committee on the Judiciary Subcommittee on Patents, Trademarks, and Copyrights. The studies have been prepared under the supervision of the Copy­ right Office of the Library of Congress with a view to considering a general revision of the copyright law (title 17, United States Code). Provisions of the present copyright law are essentially the same as those of the statute enacted in 1909, though that statute was codified in 1947 and has been amended in a number of relatively minor respects. In the half century since 1909 far-reaching changes have occurred in the techniques and methods of reproducing and disseminating the various categories of literary, musical, dramatic, artistic, and other works that are subject to copyright; new uses of these productions and new methods for their dissemination have grown up; and industries that produce or utilize such works have under­ gone great changes. For some time there has been widespread senti­ ment that the present copyright law should be reexamined compre­ hensively with a view to its general revision in the light of present­ day conditions. Beginning in 1955, the Copyright Office of the Library of Congress, pursuant to appropriations by Congress for that purpose, has been conducting a :program of studies of the copyright law and practices. The subcommittee believes that these studies will be a valuable con­ tribution to the literature on copyright law and practice, that they will be useful in considering problems involved in proposals to revise the copyright law, and that their publication and distribution will serve the public interest. The present committee print contains four studies: No. 22, "The Damage Provisions of the Copyright Law" by William S. Strauss, Attorney-Adviser of the Copyright Office; No. 23, "The Operation of the Damage Provisions of the Copyright Law: An Exploratory Study" by Prof. Ralph S. Brown, Jr., of the Yale Law School; No. 24, "Rem­ edies Other Than Damages for Copyright Infringement" by William S. Strauss; and No. 25, "Liability of Innocent Infringers of Copyrights" by Alan Latman, formerly Special Adviser to the Copyright Office, and William S. Tager, both now engaged in the practice of law in New York City. The Copyright Office invited the members of an advisory panel and others to whom it circulated these studies to submit their views on the issues. The views, which are appended to the studies, are those of individuals affiliated with groups or industries whose private interests may be affected by copyright laws, as well as some independent schol­ ars of copyright problems. It should be clearly understood that in publishing these studies the subcommittee does not signify its acceptance or approval of any statements therein. The views expressed in the studies are entirely those of the authors. JOSEPH C. O'MAHONEY, Chairmen, Subcommittee on Patents, Trademarks, and Oopyriglds, Oommittee on the Judiciary, U.S. Senate. m COPYRIGHT OFFICE NOTE The studies presented herein are part of a series of studies prepared for the Copyright Office of the Library of Congress under a program for the comprehensive reexamination of the copyright law (title 17 of the United States Code) with a view to its general revision. The Copyright Office has supervised the preparation of the studies in directing their general subject-matter and scope, and has sought to assure their objectivity and general accuracy. However, any views expressed in the studies are those of the authors and not of the Copyright Office. Each of the studies herein was first submitted in draft form to an advisory panel of specialists appointed by the Librarian of Congress, for their review and comment. The panel members, who are broadly representative of the various industry and scholarly groups concerned with copyright, were also asked to submit their views on the issues presented in the studies. Thereafter each study, as then revised in the light of the panel's comments, was made available to other in­ terested persons who were invited to submit their views on the issues. The views submitted by the panel and others are appended to the studies. These are, of course, the views of the writers alone, some of whom are affiliated with groups or industries whose private in terests may be affected, while others are independent scholars of copyright problems. ABE A. GOLDMAN, Ohiej oj Research, Oopyright Office. ARTHUR FISHER, Register oj Oopyrights, Library oj Oongress. L. QUINCY MUMFORD, Librarian oj Oongress. v STUDIES IN EARLIER COMMITTEE PRINTS First print: 1. The History of U.S.A. Copyright Law Revision from 1901 to 1954. 2. Size of the Copyright Industries. 3. The Meaning of "Writings" in the Copyright Clause of the Constitution. 4. The Moral Right of the Author. Second print: 5. The Compulsory License Provisions in the U.S. Copyright Law. 6. The Economic Aspects of the Compulsory License. Third print: 7. Notice of Copyright. 8. Commercial Use of the Copyright Notice. 9. Use of the Copyright Notice by Libraries. 10. False Use of Copyright Notice. Fourth print: 11. Divisibility of Copyrights. 12. Joint Ownership of Copyrights. 13. Works Made for Hire and on Commission. Fifth print: 14. Fair Use of Copyrighted Works. 15. Photoduplication of Copyrighted Material by Libraries. 16. Limitations on Performing Rights. Sixth print: 17. The Registration of Copyright. 18. Authority of the Register of Copyrights to Reject Applications for Registration. 19. The Recordation of Copyright Assignments and Licenses. Seventh print: 20. Deposit of Copyrighted Works. 21. The Catalog of Copyright Entries. VI CONTENTS Study No. Page 23. The Operation of the Damage Provisions of the Copyright Law: An Exploratory Study _ __ __ _________________ Comments and Views Submitted to the Copyright Office___ _____ 59 93 STUDY NO. 23 THE OPERATION OF THE DAMAGE PROVISIONS OF THE COPYRIGHT LAW: AN EXPLORATORY STUDY S. BROWN, JR., WITH THE ASSISTANCE OF A. O'BRIEN AND HERBERT TURKINGTON By PROF. RALPH WILLIAM March 1958 59 CONTENTS I. Introduction , _______ ___________ ____________________ _______ ___ II. The questionnaire. _________________________________________ ___ A. Gross results__________________________________________ B. Bases for settlements___________________________________ __ _ C. Bases for [udgments, ______________ ____ ____ __ _ Ill. Actual damages _ _ _ _________________________ ___________ ____ ___ IV. Profits_______________________________________________________ V. Statutory damages. A. Music performing rights and the minimum damage provision , B. Other uses of minimum damages_________________________ C. Multiple infringements: the $5,000 maximum and its avoid­ ance by "actual notice" D. The special minimums and maximums , _ _ ___ __ __ __ ___ E. Summary on statutory damages , _ ____ __ ___ _______ ___ VI. Costs and attorney's fees______________________________________ VII. Indemnity and insurance , _ ___ __ __ ___ _ ______ ________ __ ___ A. Indemnity ___ ____ __ ____ __ __ __ __ ____________ _ i , _ __ _ _ B. Insuranee.L;.; __________ __ __ _ _ __ _ _ __ __ __ __ __ __ __ _ _ _ __________________________ 61 P.... 63 66 67 67 68 69 71 72 72 76 77 80 82 84 86 86 88 THE OPERATION OF THE DAMAGE PROVISIONS OF THE COPYRIGHT LAW: AN EXPLORATORY STUDY 1. INTRODUCTION This study is an imperfect and experimental attempt to cast some light on the actual operation of the damage provisions of the Copy­ right Act. Those provisions, as is well known, are extraordinarily elaborate, indeed uniquely so. They include the following elements: 1 (1) "such damages as the copyright proprietor may have suffered due to the infringement"; (2) "as well as all the profits which the infringer shall have made from such infringement * * ".' (3) "or in lieu of actual damages and profits, such damages as to the court shall appear to be just," a broad grant of discretion guided in these ways: (a) by the permissive schedule of items "First" through "Fourth" (here set out in a footnote)," of which the most used is "$1 for every infringing copy" of works other than paintings, statues, or sculptures. (b) by a general maximum of $5,000 and a general mini­ mum of $250. (c) by a special minimum of $50 and maximum of $200 "ill case of a newspaper reproduction of a copyrighted photograph." (d) by a special maximum of $100 for innocent infringe­ ment of an "undramatized or nondramatic work by means of motion pictures." (e) by a special maximum of $5,000 for innocent infringe­ ment "of a copyrighted dramatic or dramatico-musical work by a maker of motion pictures and his agencies for distri­ bution thereof to exhibitors"-which presumably differs from the general $5,000 maximum in that only one such $5,000 recovery is permitted against the maker and his distributors. (j) a special maximum of $100 for innocent infringement "by broadcast" of a "lecture, sermon, address, or similar production, or other nondramatic literary work" is found in a 1952 amendment to section 1(c).3 ---- 161 Stat. 652, 661, 17 U.S.C. 101(b), (1952),except as otherwise indicated. 2 First. In the case of a painting, statue, or sculpture, $10 for every infringing copy made or sold by or found in the possession of the Infringer or his agents or employees; Second. In the case of any workenumerated in section 5 of this title, except a painting, statue, or sculpture, $1 for every Infringing copy made or sold by or found in the possession of the Infringer or his agents or employees; Third. In the case of a lecture, sermon, or address, $50 for every Infringing delivery; Fourth. In the case of a dramatic or dramatico-musical or orchestral composition $100 for the first and $50 for every subsequent Infringing performance; In the case of other musical compositious $10 for every infringing performance. • 66 Stat. 7.52, 17 U.S.O. (1) (1952). 63 64 COPYRIGHT LAW REVISION (g) "the limitation as to the amount of recovery [shall not} apply to infringements occurring after the actual notice to a defendant * * *." (4) Another form of statutory damages is found in section l(e) and section 101(e), with respect to mechanical recordings. The court may require infringers to pay up to four times the statutory royalty. This subject will not be treated in this study.' (5) "the court may award to the prevai.ing party a reasonable attorney's fee as part of the costs" (sec. 116). In short, there are three major elements of the damage provisions with which this report is concerned: (1) actual damages and profits, (2) statutory damages, including all the refinements listed in items (a) to (g) above, (3) costs and attorney's fees. Actual damages are of course the cornerstone of commonlaw reme­ dies; infringer's profits are an equally familiar concept from equity practice. Their statutory embodiment is, however, not free of am­ biguities. For example, there is the question whether the phrase "as well as" is to be read literally so as to permit the recovery of damages and profits, or whether it can be taken in what is usually considered a more rational disjunctive meaning." Such questions of interpretation are not our concern, unless they seem to affect the practical administration of the statute either by the courts or by lawyers in settling cases. We will instead ask: To what extent are actual damages and profits determinable in copyright cases'! '1'0 what extent are they awarded? Similar questions should be asked about statutory damages. To what extent do parties and courts resort to them because of the sup­ posed indeterminacy or inadequacy of actual damages? If they are preferred by plaintiffs, do they appear to contain inequities for de­ fendants? What parts of the statutory damage scheme are actually used, and by whom? Here we have to consider the general $250 minimum, the general $5,000 maximum, the various special minima and maxima, and the suggested schedules "First" through "Fourth." With respect to attorney's fees, how often are they awarded, in what amounts, and in what circumstances? What role does their possible availability play in settlements? Partial answers to these questions have been sought from three sources. First, the reported cases; second, a questionnaire; third, interviews and correspondence which amplified the questionnaires, or which were independently initiated. We interviewed about 25 lawyers experienced in copyright matters, and had helpful letters from perhaps 10 more. Information derived from these last sources, and from the cases, will be drawn upon at appropriate places. The questionnaire requires separate analysis. It is reproduced below. 4 See Henn, The Compulsory License Provisions of the United States Copyright Law [Stndv No.5 In the present series of Committee Prints, pp. 13-21]; Shapiro, Bernstetm '" Co. v. Goody. 248 F. 2d 260 (2d Clr. 1957), holding, Inter alia, the $250 minimum damage provision of sec. 101(t) Inapplicable to an infrlnelng phonograph record, because sees. 1(e) and 101(e)create a separate statutory scheme of damages. An Inter­ viewee stated that the provisions for discretionary awards of threo times the statutory llcense fee, In addi­ tion to the basic two cents per "part" manufactured, fire not Invoked In practice. I See Strauss, "The Damage Provisions of the United State, Copyright Law" [Study No. 22In the present Oommlttee Print. p, 5]. COPYRIGHT LAW REVISION 65 COPYRIGHT DAMAGES SURVEY MARCH 1957. (All estimates can be approximate. Please confine yourself to the postwar period.) 1. Approximately how many cases have you handled in the last 10 to 12 2. 3. 4. 5. 6. 7. years that involved copyright money damage claims? 1 to 5 _ 6 to 10 _ If more than 10, about how many _ (By case, we mean any matter that involved communi­ cation with an opposing party, not just advice to a client.) Have you handled any common law literary property cases that in­ volved damage claims? (approximate number) _ In what rough percentage of those cases in questions 1 and 2 were you representing-Plaintiffs? (include counterclaiming defendants) _ Defendants? _ How many of these cases were settled or otherwise disposed of before judgment? _ Of the cases closed before judgment, how many would you say were concluded on the basis of (a) Cessation (by license or otherwise) of infringement_ (b) Money settlement based on­ (i) Actual damages _ (ii) Infringer's profits _ (c) Money settlement based on statutory damages _ (d) Money settlement based on expenses of suit, including attor­ ney'sfees _ How many of your cases were carried to judgmentL _ In those cases carried to judgment in which there was a recovery, in how many was recovery­ (a) Based on actual damages _ (b) Based on infringer's profits _ (c) Based on statutory damages _ (d) Infee many was the successful party awarded an attorney's how _ 8. If you had any cases involving the award of statutory damages (item 7(c) above), did any of them involve the application of (or depar­ ture from) the statutory scheme of damages in sec. 101(b) "First" through "Fourth" _ (If so, could you describe them briefly on a separate sheet?) How many, if any, of the statutory damage cases resulted in the award of the $250 minimum statutory damagesL _ 9. Have you had any cases, either settled or tried, that involved statu­ tory damages in excess of $5,000 (because of infringement with notice, or because of a finding of multiple infringements) L _ (If so, could you describe them briefly on a separate sheet?) 10. Have you had any cases, either settled or tried, that involved the special minimum and maximum statutory damages, as follows: (a) Newspaper reproduction of a copyrighted photo ($50 min­ imum, $200 maximum)? _ (b) Innocent infringement of nondramatic work by motion pic­ ture ($100 maximum)? _ (c) Innocent infringement of nondramatic work by broadcast (sec. 1(c); $100 maximum)? _ (If so, could you describe them briefly on a separate sheet?) The information in this questionnaire will be used in attempting to reach con­ clusions about the use and usefulness of the damage provisions. It will not be ascribed to you. May we communicate with you further about your experience with the damage provisions? Yes . No . Whether any further information is to be ascribed to you or quoted from you will be determined by mutual agreement in each case. -_. -...---------_.. yoii- n,iiiie-----------_.--------r --..--------------.- ·-Adfuess----.-._- --_.--------­ 66 COPYRIGHT LAW REVISION II. THE QUESTIONNAIRE A little more than 500 copies of the questionnaire reproduced on the foregoing pages were sent out, of which about 480 went, in late March 1957, to the members of the Copyright Society of the U.S.A., through the kindness of its then President Joseph A. McDonald, and Mr. Fred B. Rothman. Eighty-eight questionnaires were returned, of which 30 reported no "cases," as defined in the questionnaire-"any matter that involved communication with an opposing party, not just advice to a client." Five returns from performing-right societies or their counsel will be treated separately. This leaves 53 reporting one or more cases. Thirteen of these respondents, with a total of approximately 50 cases, reported that none of their cases had resulted in any monetary pay­ ments. These respondents are not included in the tabulations that follow. If they were included, the only effect would be to increase to some extent the number of settlements based on cessation of the claimed infringement-a figure which, though large, could not be tabulated (see p. 67 below). Another respondent, who had been connected with about 50 cases, was unable to provide any numerical breakdown of his cases; so his return is also omitted. The remaining 39 respondents are those whose experience (in the postwar period) included some cases in which money payments were made, as well as those that were otherwise disposed of. This is less than half of all those responding, and less than 10 percent of those ap­ proached, not a very rewarding return, even if one considers that many of the members of the Copyright Society are libraries and others not in active practice. N everthelesajthe 39 respondentsjlisted a total of roughly 850 cases, so the results are not altogether insignificant, even after the following qualifications are emphasized. 1. A glance at the questionnaire will show that estimates and ap­ proximations were all that was requested in most instances, and in­ deed all that could be provided without great difficulty. Most of the totals given here are rounded, and are the rough medians of the range of cases reported under a given question. 2. The questionnaire was apparently unclear at some points. This was of course not intended. On the other hand, deliberate effort to encourage responses by keeping the questions as simple as possible resulted in our seeking no information about the kinds of infringe­ ments reported. When it became apparent that music performing rights cases should be separated, we were able to identify plaintiffs with fair accuracy, defendants with less. 3. A few respondents account for a great many cases. Particu­ larly, one west-coast firm reported, under question 1, 100 cases, mostly on behalf of plaintiffs and with a large preponderance of com­ mon-law cases. A New York firm reported 150 cases with a similar disproportion. Another New York firm reported more than 50 cases, usually on behalf of defendants. These three respondents thus ac­ counted for about one-third of all the cases reported. Their special patterns must be kept in mind. COPYRIGHT LAW REVISION 67 A. GROSS RESULTS Of the total of 850 cases, about 250 were common-law literary prop­ erty cases (question 2). Half of the common-law cases carne from the two respondents mentioned above with the largest numbers of cases. For this reason no inference should be drawn that common­ law cases amount to almost one-third of copyright claims in actual practice. But they do so figure in these tabulations. Representation of plaintiffs was reported in about 400 cases, for defendants in about 450 (question 3). Half of the total plaintiffs' representations are accounted for by the same two firms; representa­ tion of defendants was much more widely dispersed. The ratio of settlements to judgments was elicited by questions 4 and 6. Of the 850 cases ("controversies" might have been a better term), about 700 were settled, and 90 were carried to judgment. Sixty were either pending, discontinued without any definite settle­ ment, or unaccounted for because of discrepancies in reporting. B. BASES FOR SETTLEMENTS The settlement of seven cases out of eight will presumably come as no surprise. What was sought in question 5 was an indication of the elements that went into these settlements. The question was not well expressed, and there was much inconsistency in the responses. Still, certain conclusions emerge. Cessation of the claimed infringe­ ment, with no money payment, Wits the outcome of a very substantial number of cases, for which a meaningful number cannot be given because of uncertain estimates. Many of these cases were accom­ panied by negotiation of a license for further use. Sixty settlements were described as based on actual damages, and only 10 on defend­ ant's profits. Together these two factors, which would probably be influential whether or not they were explicitly sanctioned by the statute, formed the basis for only 10 percent of the settlements. Thirty-two settlements were reported to be based on "statutory damages" (we did not ask for further specification). This is less than 5 percent of the total. If we now take into account the likeli­ hood that about one-third of the settlements occurred in common­ law copyright cases where statutory damages would be inapplicable, the percentage is still only 7. Furthermore, 2 respondents, 1 listing 15 and the other 10 such cases, made up three-fourths of the modest total of 32. Under the heading "Money Settlement Based on Expenses of Suit, Including Attorney's Fees," 135 cases were reported, 20 percent of the total. This response occurred despite some ambiguity in the question, which was intended to refer to what the expected expenses of litigation would be. Finally, six respondents volunteered "general' bargaining power," or its equivalent, as the basis for settlement in 93 cases, 13 percent of the total. It is apparent that statutory damages played only a minor role in the attainment of the settlements enumerated by these 40 respond­ ents who, it should be remembered, are not intended to include par­ ties to claims based on music performing rights. However, the possibility of statutory damages, particularly minimum damages and attorney's fees, may have been influential in the many cases 68 COPYRIGHT LAW REVISION where the defending party gave some sort of undertaking that the alleged infringement would not be continued or repeated. C. BASES FOR JUDGMENTS In the replies to item 7 on the questionnaire, actual damages were reported as the basis for 40 of the 54 judgments in which re­ coveries were reported (the remaining 36 judgments out of the total of 90 apparently went for defendants. In some only injunctive relief may have been sought). Profits were awarded in five. For this purpose it is unnecessary to separate common-law from statu­ tory cases, since the availability of actual damages or profits is es­ sentially the same in either kind of action. Statutory damages were reported to underlie nine judgments. If the assumption is made that one-third (18) of the judgments were in common-law cases (following the overall ratio of common­ law to statutory copyright matters in the entire sample), then statu­ tory damages were the basis for about 25 percent of the 36 plaintiff's i!Jdgments assumed to have been awarded under the Copyright Act. This 25 percent is still subject to considerable error; the reader should not be misled by the apparent exactness of the small numbers we are now reviewing, for they also are partly estimated and contain various discrepancies. But the role of statutory damages in judg­ ments is by any measure significantly greater than their apparent influence on settlements. This is the one area in which the questionnaire results can mean­ ingfully be compared with reported decisions, and such a comparison is rather startling. In the same decade to which the questionnaire was directed, there are 24 reported decisions in which plaintiffs were successful (not counting one performance right case.)" In two of these an injunction only was awarded. Two cases awarded actual damages, four profits. Four used a combination of elements for different counts-profits and statutory damages, actual damages and profits, actual and statutory damages, and (in one case) all three. It will be noted that statutory damages figured in three of these "combination" cases. The remaining 12 cases were all awards of statutory damages. Thus statutory damages appeared in 15 out of 24 cases, or about 60 percent. This ratio is so much greater than that shown by the questionnaire that some explanation is called for. Indeed, the proportion of actual damage and statutory damage cases is, between the questionnaire and the reported decisions, in effect reversed. Perhaps there are a large number of cases involving actual damages that raise no important questions of law, and are not reported. • Next, the questionnaire returns show that attorney's fees were awarded in 18 cases, 30 percent of the 60 cases going to judgment that are assumed to have been brought under the Oopyright Act. The attempt to get specific information, in questions 8, 9, and 10, about the application of the numerous components of statutory dam­ ages, did not yield any statistically meaningful returns, except in a negative way. That is, only occasional references were made to any one of the specifications of statutory damages, with the single excep­ tion of claims for "statutory damages in excess of $5,000 (because of • The cases were taken from "Copyright Decisions" through Copyright Office Bulletin No. 29 (1953-54) and thereafter from U.S.P.Q. through May 1967. COPYRIGHT LAW REVISION 69 infringement with notice, or because of a finding of multiple infrin~e­ ments)" (question 9). Twelve such claims were reported. The In­ formation that was obtained under these headings, as supplemented by correspondence and interviews, will be discussed below. In sum, the questionnaire results that could be tabulated, while they must be taken with caution because of the narrow base on which they rest, point to the following findings: (1) There is an expectably high ratio of settlements to judg­ ments (7 to 1). (2) The statutory damage provisions (those other than actual damages and profits) seem to playa minor part in the negotia­ tion of settlements. (3) In a small group of cases going to judgment, the statutory damage provisions were used to a significant extent (about 25 percent). (In reported decisions of the same period, their use is much higher-50 percent.) (4) Attorney's fees, stemming from another statutory provi­ sion, were awarded in a significant number of the judgments (about 30 percent). The basis for these awards is another matter which will be discussed below. It should be reiterated that these observations do not apply to performance-right cases. III. ACTUAL DAMAGES This section and the following one on profits are, to a greater extent than the rest of this study, simply supplementary to "Copyright Law Revision Study No. 22" by William Strauss [in the present committee print]. Though it appeared that actual damages were the basis for a substantial number of recent judgments, according to questionnaire respondents, they appear in few reported decisions. One shortcoming of actual damages as a remedy in copyright cases, it has long been considered, is the supposed difficulty of computing them. Since works subject to copyright are by and large differentiated from each other, it is difficult to establish values. If the value of the work before the infringement and its diminished value afterward are sought, in accordance with one approved technique of damage law, two valuations are necessary. Or, if the plaintiff's lost profits are proposed as a measure of his damages, there is the problem of estab­ lishing with reasonable certainty what they would have been. On the other hand, it is suggested that where valuations are called for, expert testimony is admissible, in line with the admissibility of such testimony in cases where profits have to be apportioned. As for lost profits, the trend in damage law in recent decades has been to relax the requirements of exactness. Once the fact of damage has been established, some freedom is left to the trier to estimate the amount." The application of both these principles is illustrated by the well­ known case of Universal Pictures Co. v, Harold Lloyd Corp.8 There the defendant, Universal, and the codefendant, Bruckman, a script­ writer employed by Universal, were found to have appropriated, in , See note, "The Requirement o! Certainty In the Proof of Lost Profits," 64 Harv. L. Rev. 317 (1950). 8163 F. 2d 354 (9th Cir. 1947). 59537-60-6 70 COPYRIGHT LAW REVISION 1943, an extensive comedy sequence from Lloyd's "Movie Crazy," in the production of which Bruckman had been employed by Lloyd in 1931-32. The trial court awarded Lloyd actual damages of $40,000 (along with an injunction, and attorney's fees of $10,000). This sum was considerably greater than Universal's profits attribut­ able to the infringement; and profits as such were not included in the award. To fix damages it was necessary to determine the value of Lloyd's movie if it were reissued or remade, and the extent to which the in­ fringement had impaired that value. For this purpose the court heard testimony about the profitability of the movie on its initial run-$400,000 during a period of economic depression. Harold Lloyd and two experts testified as to its possible profitability as a reissue or a remake, and to the considerable impairment of that value by the defendant's widely distributed infringement of a major component (the "magician's coat" sequence in issue accounted for about 30 per­ cent of the original cost of production of "Movie Crazy"). Experts for the defendant gave opposing testimony-that "Movie Crazy" was obsolete and of no value. The trial court had to take into account these conflicts of testimony, and also the effect on the reissue value of "Movie Crazy" resulting from another infringement by Columbia Pictures, in a short comedy, of the same material. The judgment withstood attack from both parties. Defendants asserted that the damages were too uncertain and speculative, and attacked the plaintiff's use of experts. Plaintiff claimed, on the one hand, that the actual damages were $400,000, and, on the other, that the court should have given consideration to statutory damages, which according to his calculations, would be $50 for each of the 6,636 theaters in which the infringing picture was exhibited, or $331,800. The circuit court upheld the trial court's exercise of discretion in awarding actual damages rather than profits or statutory damages, its admission of testimony of "alleged experts," and its final figure. It is quite possible that the use of expert testimony might be too costly a method of proof except where the amounts involved are large. There is another type of case in which actual damages may also be appropriate, and in which they are more readily computed. As distinct from plagiarism cases like Universal Pictures, these cases raise no issue whether the defendant used the plaintiff's material. The questions turn rather on the defendant's right to use the material, in the light of earlier or incomplete contractual relations between plaintiff and defendant. These may be called "contractual" cases. An apt illustration is the very recent case of Szekely v. Eagle Lion Films, Inc? There the defendant Eagle Lion used a screenplay for which the plaintiff, under the terms of a contract with a codefendant, Geiger, was to receive $35,000, of which only $10,000 had been paid. The court held that the defendant's appropriation had made plaintiff's interest in the play valueless, and that plaintiff was entitled to the unpaid $25,000 as compensatory damages. Another recent case which illustrates the use of an earlier contract price as the measure of damages is Advertisers Exchange v. Himkleu," • 242 F. 2d 266 (2d Cir. 1957). 10 199F. 2d 313 (8th Cir. 1952),cert. denied, 344U.S. 921 (1953) affirming 101F. Supp. 801 (W.D. Mo. 1951). See also Gordon v. Weir, 111 F. Supp. 117 (E.D. Mich. 1953). Plaintiff's recovery was computed in part on the basis of his income from previous dealings with the defendant In similar copyrighted material used in a newspaper contest. For other in!ringements in the same case minimum damages were awarded, and for ~tilJ others, derendant's profits. COPYRIGHT LAW REVISION 71 There a merchant had had a I-year contract with the plaintiff for the use of the plaintiff's copyrighted advertising services, at a price of $156. After the year was up the defendant merchant continued to use plaintiff's copyrighted mats for advertising in a local paper for almost 2 years. The court, rejecting plaintiff's contention that it was entitled to statutory damages of about $90,000 (computed by plaintiff at the rate of $1 for each copy of the newspaper in which the advertisements were published), said that the only damage the plain­ tiff could have suffered was $312-2 years' income at the contract price. Judgment was awarded for this amount. Though the dis­ cussion, especially in the court of appeals, is largely in terms of statutory damages, since the plaintiff did not claim actual damages, it is clear that the computation reflected putative actual damage, measured by the contract price. It thus appears that in appropriate cases techniques are available for determining actual damages. To the extent that these techniques seek to overcome the uncertainty of valuing a unique creation by permitting rather free estimates, they raise one further question. Suppose the plaintiff demands a jury trial on the issue of damages. Some fears have been expressed. derived from experience in unfair competition and common-law copyright cases, especially in Oalifornia, that juries may make excessively large awards.'! Thus far there seem to be not enough instances to support a gen­ eralization that juries are overgenerous in this field. No cases re­ ported under the Oopyright Act seem to have resulted in large awards by juries. Awards that are "grossly excessive" or that fail to meet other measuring sticks of judicial discretion may of course be cut down by remittitur (unless the plaintiff chooses the alternative of a new trial). The scope of remittitur in the Federal courts is narrower than in many State courts, at least at the appellate level, where the courts of appeal have long deferred to the discretion of the trial judge and to the command of the seventh amendment that "no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law." But there seems to be no question that the Federal trial judge has some power to set aside excessive verdicts." And reviewing courts are said to be more perceptive of reversible error when verdicts are swollen. IV. PROFITS The award of "all the profits which the infringer shall have made from such infringement" is a subject which seems to have been well developed in the case law, as outlined in the Strauss memorandum and elsewhere.P There may be practical difficulties in making an accurate accounting of profits in cases where an irresponsible infringer keeps inadequate records:'! and any accounting may be complicated 11 On the availability of jury trial, see Karp, "Copyright Litigation," in 7 Copyright Problems Analyzed 171 (1952) on their frequency in California; Carman, "The Function of Judge and Jury" in the "Literary Property" Lawsuit, 42 Calif. L. Rev. 52 (1954). Much of the California litigation has been brought in the State courts on an implied contract thcory (one correspondent says this is so even when the material is copyrighted). Sce Kaplan, "Implied Contract and the Law of Literary Property," 42 Calif. L. Rev.2B (1954),reporting (notes 5-6) judgments of $25,000 and $35,000 in the Golding and Stanley cases. Much larger jury verdicts have been reported in the trade press in eases which were not appealed and in which there was probably a settlement for a lesser sum. 12 See Moore, "Federal Practice," par. 59.05(3), 59.08(6); Neese v, Southern RV. Co., 350 U.S. 77 (1950). 13 Strauss, op. ctt., supra, note 5 at 5-7; Warner, "Radio and Television Rights," sec. 162 (1953). Warner also discusses many of the other eases and problems treated In this study. II But the statute, by requiring the plaintiff to "prove sales only," puts most of this burden on the defendant; see Whitman Publishing Co. v, Writsell, 83 U.S.P.Q. 535 (S.D. OhIo 1949). 72 COPYRIGHT LAW REVISION by difficulties, not peculiar to this field, of allocating overheads or other joint costs.'! A major anomaly in the award of profits was ended by the Sheldon case in 1940, when the Supreme Court affirmed the decision of the second circuit 16 that profits could be apportioned, thus, giving effect to the seemingly clear statutory mandate quoted above. The earlier rule compelling an award of all profits on an infringing production, without determining the contribution of the work infringed to the final product, may have resulted in a denial of relief in cases where the courts were unwilling to bestow a huge windfall on the plaintiff." The Sheldon case calls for liberality to the plaintiff where the extent of his contribution cannot be accurately determined. The few apportionments made in the cases since Sheldon, apparently influenced by the 20 percent of profits from a motion picture awarded to the author in that case, seem to have followed that admonition." Such liberality may be misplaced when the profits of an innocent infringer are taken. After his success in the case against MGM, Sheldon sued the operators of the Capitol Theater in N ew York for their profits from a 2-week run of the picture. The court in this case probably had no alternative to adopting the same percentage used in the main case, with the result that the defendant had to pay over $3,099 profits (plus $1,500 attorney's fees, and a $1,000 allow­ ance to a special master), even though the court found that the respondent "is unquestionably an innocent infringer." The plaintiff had already been awarded, as his share of the profits of the producer, far more than the probable commercial value of his play. He was now in a position to exact a reward from thousands of exhibitors who ordinarily would make no direct contribution to the author." How­ ever, an apportionment such as was made in the Capitol Theater case is clearly preferable to taking all the profits of an innocent infringer. The situation of the innocent infringer with respect to statutory damages will be discussed in part V below. V. STATUTOHY DAMAGES A. MUSIC PERFORMING RIGHTS AND THE MINIMUM DAMAGE PROVISION It has been previously suggested that performing rights cases stood somewhat apart from other claims for damages. There are two related reasons for this. First, the existence of powerful collec­ tive licensors of performing rights in musical compositions has per­ mitted a vigorous enforcement of those rights. Second, in such enforcement the statutory $250 minimum damage provision has been an important and controversial weapon. There are three licensors of performing rights whose practices are of interest. ASCAP, the American Society of Composers, " Consult note, "Monetary Recovery for Copyright Infringement," 67 IIarv. L. Rev. 1044, 1049 (1954). "Sheldon v, Metro-(loldwyn Pictures Corp., 106F. 2d 45 (1939),aff'd 309 U.S. 390 (1940). 17 E.g. Witwer v. Harold Lloyd Corp., 46 F. 2d 792 (S.D. Cal. 1930),rev'd 65 F. 2d 1 (9th Cir. (933); see dis­ senting opinion at pp. 44-47. 'I'he circuit court, in reversing the district court, found no infringement of plaintiff's story in a movie which made profits of $1 to $2 million, though access was proved and similarities were plausible. The plaintiff had never got more than $1,000 for a movie story. 18 Harris v. Miller, 57 U.S.P.Q. 103 (S.D.N.Y. 1943) (35 percent of profits of play allocated to script); Stonesifer v, 20th-Century Fox Film Corp., 48 F. Supp. 196,(S.D. Cal. 1942) aff'd 140 F. 2d 579 (9th Cir. 1944) (20 percent of movie profits). 19 Sheldon v, Moredall Realty Corp., 29 F. Supp. 729 (S.D.N.Y. 1939);cf. Washingtonian Pub. Co. v. Pear­ son, 140 F. 2d 465 (D.C. Cir. 1944). There a 10-percent apportionment was made for a few pages of a book that were unintentionally Infringing. But the publisher, who had made substantial profits, was bankrupt; the [udgment against the authors, who had not received most of their royalties, was for $15.46;the printer had made no profits. COPYRIGHT LAW REVISION 73 Authors & Publishers, is the oldest and largest. Broadcast Music, Inc., a rival to ASCAP formed in 1940 and controlled by broadcasters, has steadily grown in importance. SESAC, Inc., does not compare with the other two in size; it is apparently the only significant inde­ pendent survivor of a number of privately owned licensors that once existed;" For all three organizations the largest market by far is in broad­ casting, and here it may be said that the statutory damage provisions are only of theoretical significance. Broadcasters negotiate licenses with the licensors, and if, as occurred in the famous dispute in 1940­ 41, no contract is in effect, the broadcaster avoids using the works of the licensor pending a new contract. Infringements by networks would be easily detected. However, ASCAP advises that whereas in 1940-41 there were only about 800 radio stations, and no television stations, there were as of December 1, 1956, 3,515 radio stations and 511 television stations. This presents an ever-present problem with non-network stations which may not have the necessary licenses to perform copyrighted works. In such cases, ASCAP advises, it incurs substantial expense in detecting and obtaining evidence of infringements by means of taping broadcasts throughout the country. Among the vast number of what may be called miscellaneous users, however, there are always new or old enterprises that either through ignorance or design do not take out licenses. Miscellaneous users includeRestaurants, taverns, dance halls, hotels, department stores, and such wired music concerns as Muzak. Of late, factories and similar industrial establishments have become important users of music.s! Licenses are always available at rates of which some representative current examples are given in table A [at page 90]. Since ASCAP pioneered in the enforcement of performing rights against such infringers, its technique may be summarized first. The practice appears not to have changed substantially from a description given in the Yale Law Journal 20 years ago, based on 1936 congres­ sional hearings. * When the society is informed through its extensive network of investigators throughout the country that some unlicensed theatre or cafe or hotel is using copyrighted music, it writes a letter informing the proprietor that he is violating the law and suggesting that he take out a license. The relevant sections of the copyright law are quoted, the leading cases cited, and the definition of "perform­ ance for profit" as laid down by the Supreme Court in Herbert v. The Shanley Co., reported in full. If there is no response, additional letters in much the same tone follow, with perhaps more emphasis on the possibility of a suit. Finally, if the proprietor persists in disregarding these warnings, suit is brought for infringement. Realizing that under the minimum damage provision there can be no defense to this action, however, the proprietor will usually capitulate before trial and obtain a license from the Society. But even when judgment has been finally entered, the Society very rarely attempts to recover upon it, and generally compromises for the cost of a license to the infringer from the time the infringe­ ment was first discovered plus the expenses of the investigation and suit. 22 Through its field offices and the lawyers who represent it throughout the country, ASCAP keeps a substantial number of these enforcement 20 See Warner, "Radio and Television Rights" (1953), ch. 13, especially pp. 361-366 (SESAC and minor licensors). 21 Finkelstein, "Public Performance Rights in Music and Performance Rights Societies," in 7 Copyright Problems Analyzed 69, 78 (1952) . • [Editor's note: A description of the present practice of ASCAP Is given by Mr. Herman Finkelstein In his comments appearing on pp. 107-109 of the "Comments and Views" attached hereto.] a.Comment, "Copyright Refonn and the Dutfy Bill," 47 Yale L.J. 433, 443 (1938). 74 COPYRIGHT LAW REVISION proceedings underway at all times. In response to the questionnaire, ASOAP reported about 700 cases in the last decade, of which 400-odd were settled. "Oases are usually settled," we were advised, "on the basis of the defendant paying an amount equal to what his license fee would have been during the period of infringement plus out-of­ pocket expenses in ascertaining infringement." Something around 40 cases was discontinued for a variety of reasons; 131 were carried to judgment, in all of which statutory minimum damages were awarded. About 125 cases were pending. ASOAP has no central records with respect to attorney's fees, but replies from four of its representatives indicate that an award of attorney's fees is almost invariable. A great many such cases were reported in the 1930's; at that time the attorney's fees were in the range of $50 to $150. A recent case history supplied by the society illustrates the process of adapting suits and judgments to the enforcement of the prescribed licensing rates. An establishment for which the license rate is $480 a year had started unlicensed performances in September 1956. Suit was filed in December 1956, alleging infringement of two copyrights. A default judgment was entered which formed the basis for a settle­ ment in March 1957. The judgment was for $657, composed of minimum damages of $250 on each copyrighted composition, costs of $57, and an attorney's fee of $100. The settlement provided for a license commencing March 1, and for payments totaling $417, of which $240 represented the license fees that would have been paid for the 6 months from September 1956 through February 1957, $120 the first quarter's fee under the new license, and $57 the statutory costs. No attorney's fee was included in the settlement. Broadcast MUSIC, Inc., appears to follow enforcement policies that are generally similar, though on a less extensive scale. Their counsel reported that, in addition to 125 to 150 licensing contracts obtained as the result of legal demand letters, 80 settlements were made which involved acceptance of a license and a money payment based on expenses including attorney's fees. Ten cases carried to judgment all resulted in statutory minimum damages, and in nine of them an attorney's fee was awarded. If it is necessary to bring suit, however, BMI does not confine itself to a number of infringements that will roughly approximate unpaid license fees, taking each infringement at $250. Offenders have by this time been repeatedly warned of their infringement and have had ample opportunity to take a license. In one recent instance BMI sued a metropolitan theatre which, without a license, had performed 16 BMI-held compositions. All 16 infringements were pleaded. However, the case was settled before trial. SESAO reports no completed litigation since the 1930's, when it carried two cases to judgment to establish unsettled rights." It attempts to persuade groups of users through trade associations, or individual users through a small staff of field representatives, of the necessity and desirability of having a license. Its spokesmen state that practically all negotiations for licensing are ordinary business negotiations in which the existence of copyright remedies does not figure. "SESAO v. Hotel Statler 19 F. SUPP. 1 (S.D.N.Y. 1937); SESAO v. WOAU Broadcasting 00.,39 U.8.P.Q.261 (E.n. Pa. 1938\; 46 U.8.P.Q. 198 (E.U. Pa. 1940); 47 U.S.P.Q. 310 (E.n. Pa. 1940) (prellmi­ nary Issues only reported). COPYRIGHT LAW REVISION 75 It may be observed that the users with whom SESAC deals have probably been made aware of the statutory remedies by the vigorous policing activities of ASCAP and BMI. The availability of the $250 minimum damages for a single infringe­ ment of a performing right has been a source of recurrent complaint by users. These complaints were most emphatic in the 1930's, when ASCAP was the only major licensing organization, and were exten­ sively voiced in the 1936 hearings on the Duffy and Daly bills." Objections to the minimum damage provision seem to have two bases. One is that it gives licensors too powerful a weapon in demand­ ing liconses at rates which users consider excessive. Behind this objection may lie dissatisfaction with having to recognize performing rights at all. For example, jukeboxes are exempt; but any establish-. ment which makes broadcast music available to its customers can presumably be required to have a license. Again, court decisions establish that for a hotel to make broadcast music available to its patrons either in public rooms or in bedrooms is a public performance for profit, and thus within the act. 25 Hotel interests, according to an interview source, resist this interpretation, especially in its application to bedrooms. They would therefore naturally be critical of a damage provision which facilitated its enforcement. Whether the cost of licenses is excessive is of course not abstractly determinable. Under the 1950 amendments to the ASCAP consent decree, any user who objects to a rate quoted by the Society can apply to the U.S. District Court for the Southern District of New York to have a fair rate fixed by the court. The other basic objection to the use of the minimum damage provision in music performing-right cases is that it exposes an innocent infringer to the threat of inordinate multiple damages, since each performance of a copyrighted composition may be the foundation for a claim of $250. Note that a regular user of music has no occasion to make this objection against the major performing-right licensors, for if ho takes a blanket license he will avoid infringement of anything in their catalogs. The fear of such users seems to be that they will be held for successive performances of some composition not licensed. Checking the catalogs of the three licensing organizations is laborious. Phonograph records, the most used means of performance, mayor may not indicate the licensor, as is also true of sheet music; and there is no statutory or other requirement that such notice be given. Reported decisions and cases described to us do not disclose any recent instances of successful damage claims for multiple infringements of copyrighted music, except for the WAll-known case of Law v. N.B.C. 26 In the case of the user who does not have any licenses and who, if he is a regular user, presumably infringes dozens of copyrights in his normal operation, we have seen that he is urged to accept a license retroactively, in settlement of any damage claims. If he persists in infringement and is sued, the probability is that he has been put on notice and that the $5,000 maximum would be lifted. Yet the stand­ ard procedure in suits by ASCAP is to sue on only enough infringe­ ments to cover the claimed license fees and other expenses. Another ,. See comment. note 22, supra; Strauss, supra, note 5 at 25-27. "Buck v. Jewell-LaSalle Realty Co., 283 U.S. 191 (1931); SESACv. Hotel Statler, 19 F. Supp.l (S.D.N.Y. 1937). JI 51 F. Supp, 798 (S.D.N.Y. 1943), 76 COPYRIGHT LAW REVISION questionnaire respondent mentioned "two or three" cases where claims were made in excess of $5,000 against unlicensed radio stations, but they were settled without suit. BMI sometimes sues and recovers larger amounts than the minimum $250. No reported decision describes a large judgment in""favor of a licensing organization. Even if self-restraint did not dictate absten­ tion from such claims, there are other reasons for selecting only a few infringements as the cause of action. One basis for the ready avail­ ability of the $250 minimum is that the actual damages for a single infringement of a single copyright are unascertainable. If a large number of infringements were sued on, the court could more readily resort to actual damages. References to the availability of statutory minimum damages are conspicuous in the publications of another type of licensing organiza­ tion which may be described as borderline. Two such licensors have circularized radio stations in recent years offering licenses to perform listed compositions or arrangements. The lists contain a high pro­ portion of works that are patently in the public domain. The list of one of these licensors appeared to include all the major works of Stephen Foster; the other included, among 83 entries under the letter A, the following: "Abide With Me," "Adeste Fidelis," "All Through the Night," "America," "America the Beautiful," "Angels We Have Heard," "Annie Laurie," "Asleep in the Deep," "Au Clair de la Lune," "Auld Lang Syne," "Away in a Manger," and a number of others which, though not of such unchallenged antiquity, are surely not subject to copyright. If the licensor was offering anything with respect to these works, it must have been a particular arrangement, a fact that was, however, certainly not made clear. B. OTHER USES OF MINIMUM DAMAGES There arc several other fields, besides that of music performing rights, in which copyright proprietors have found the minimum damages provision especially useful. 1. Motion pictures.-In the 1930's a concerted effort was made in the motion picture industry to deter exhibitors from evading rental fees. Many exhibitors were apparently guilty of a variety of trade practices which resulted in exhibitions at unauthorized times and places for which no compensation was paid to the producer. The usefulness of the minimum damage provision in this campaign is succinctly described by an expert on the subject, Edward A. Sargoy, Esq., in his comments to the Strauss study, and need not be repeated here. Mr. Sargoy writes that "the practice was virtually almost stamped out." 27 It should be mentioned that the recoverable actual damages or profits in these cases are rather more substantial than would ordinarily be the case for a single infringement of a musi­ cal performing right. 2. Sheet music publishers.-The music-publishing industry has been plagued with infringers of sheet music. Sometimes both words and music were copied; more commonly, the words of popular songs were collected in pamphlets or other publications, which were widely sold on newsstands. A systematic campaign in which the $250 minimum was effectively involked , was directed in the 1930's against " Sargoy comments, p. 110. COPYRIGHT LAW REVISION 77 this particular form of infringement. Newsstands were first generally warned; then infringing songbooks were purchased to fix liability; a specific warning was given, and finally, if the infringing sales con­ tinued, suit was instituted for $250. An attorney active in this cam­ paign reports that it was highly successful." Nevertheless, leaflets incorporating copyrighted lyrics still are circulated for use in taverns and other places of entertainment. A more elaborate form of in­ fringement is the clandestine preparation and sale, at a price of $20 to $25, of extensive compilations of copyrighted music and lyrics. An example of this sort of collection which the writer has seen bore no indication of its origin and included no notices of copyright. 3. Packaged advertising.-There are a number of reported cases in which suppliers of copyrighted advertising material have resorted to the $250 minimum against defendants who continued to use the material after the contract period on their license expired or who had copied without having had a license. As the result of the Supreme Court's decision in L. A. Westermann 00. v. Dispatch Printing 00.,29 which decided that each illustration in a packaged advertising series could be the subject of a copyright and that the $250 minimum was recoverable for each copyright infringed, plaintiffs in these cases have on several other occasions also been awarded multiples of $250, not without expressions of dissatisfaction by the judges. In Advertisers Exchange v. Hinckley, previously discussed, the court rejected the plaintiff's large claims for statutory damages and awarded what in effect were actual damages based on the contract price." C. MULTIPLE INFRINGEMENTS; THE $5,000 GENERAL MAXIMUM AND ITS AVOIDANCE BY "ACTUAL NOTICE" Though there have been cases where an award of statutory damages in the maximum amount of $5,000 has provoked criticism, for example, Justice Black's dissent in F. W. Woolworth 00. v. Contemporary Arts, Inc}1 this provision does not seem to have created much difficulty in administration. The possibility of awards greater than $5,000, based on "infringements occurring after the actual notice to a defendant, either by service of process in a suit or other written notice served upon him," does create concern among large users of material subject to copyright. Magazine and newspaper publishers, broadcasters, and the advertisers who support all of them, consider that their potential liability is alarming. Each has special problems. Modern advertising campaigns are often saturation affairs that employ all media simultaneously and intensively for a limited period. A campaign, once started, cannot feasibly be stopped. If an adver­ tiser receives notice early in the campaign that an illustration or piece of copy infringes a copyright, he has little choice but to continue, at the risk of losing the protection of the $5,000 maximum. Larger damages than $5,000 might be found, either by multiplication of mini­ 28 For a reported example, see Johns & Johns Printing Co. v. Paull-Pioneer Music Corp., 102 F. 2d 282 (8th Cir. 19391. "2·19 U.S. 100 (1919). See note 10, supra. Multiples of $250were awarded In Advertisers Exchange, Inc. v. Lauffe, 29 F. SuPP. 1 (W.D. Pa. 1938); Krafft v. Cohen, 32 F. Supp. 821 (E.D. Pa.1940); Zuckerman v. Dickson, 35 F. Supp.903 (W.D. Pa. 1940); Advertisers Exchange, Inc. v. Bauless Drug Store, Inc., 50 F. Supp. 169 (D.N.J. 1943); Amsterdam Syndicate, Inc. v. Fuller F. 2d 342 l8th Clr. 1946) though plaintiff's demand characterized e awards of $2!iO were made reluctantly In Doll v. Libin, 17 F. Supp. as "harsh and unreasonable"); sing l154 546 rD. Mont. Ig36); Lmdsay & Brewster, Inc. v. Verstein,21 F. Supp. 264 (D, Md. 1937). sr 344 U.S. 228, 334 (Ii/52); ef. DouglaB v. Cunningham, 294 U.S. 207 (1935) (unanimous opinion that award up to $5,000is with: II discretion of tria! court). 3. 78 COPYRIGHT LAW REVISION mum damages for separate infringements in many different outlets or by application of the statutory schedule of $1 a copy ($10 a copy in the case of a painting). Broadcasters, besides being jointly liable with advertisers for the latters' infringements, have their own programs to consider. These also are advertised in ad vance; often some kind of synopsis will be given. Network broadcasters report that they are accustomed to receiving a number of telegrams and other communications purport­ ing to give notice of infringement before every television spectacular. There will be insufficient time to check the claimed invasion; the show must go on. If each station outlet is considered to be the source of an "infringing performance," as Law v. NBO 82 held, substantial damages can result from the application of paragraph "Fourth" of the statutory schedule. However, for these damages to exceed the $5,000 maximum would require 100 outlets in the case of a "dramatic or dramatico-musical or a choral or orchestral composition," and more than 500 in the case of "other musical compositions." Such a situa­ tion is unlikely to occur unless the infringement is continued through a series of programs. Publishers of magazines and newspapers also share legal respon­ sibility for infringing advertisements. Against these infringements, however, they (and the broadcasters, too) will ordinarily be indemni­ fied. Most of the editorial content of a newspaper is either written by its own employees or supplied by news associations or syndicates who presumably stand behind their material. There seems to be little concern about copyright liability in the newspaper industry. Magazine publishers, however, use material from a variety of sources. They may buy material from an author who is himself a plagiarist, or they may become liable as infringers to an author if, under pressure of a deadline, they use his work while negotiations are incomplete, and have not ripened into a valid license. The publishers then, if they receive notice of infringement when the presses are already rolling, have to contemplate the theoretical possibility of damages measured at $1 a copy for a circulation that may amount to millions. However, all these possibilities of astronomical damages do appear to be quite theoretical. In the first place, "in lieu" damages are defined in the statute as "such damages as to the court shall appear to be just," and though the trial court's statutory discretion is extensive. the Supreme Oourt, in confirming that discretion in two modern cases, has in both made the point that the area of discretion lay between the $250 and $5,000 minimum and maximum.P Second, it has long been settled that the schedules "First" through "Fourth," which form the basis for the most exaggerated hypothetical calculations, need not be resorted to by the court; they are simply guides to discretion." Third, there appear to be only three reported cases under the 1909 act-all from district courts-Ill which statutory awards greater than $5,000 were made. In Schellberg v, Empringham 85 the total award was $8,500, $8,000 of which was computed at $1 per copy for two infringing editions of a book. Four thousand dollars of this was against the publisher who participated in the second edition with knowledge of the infringement. The rest was against the plagiarist and his business. The $5,000 maximum was not discussed. A 32 51 F. Bupp, 798 (S.D.N.Y. 1943). sa Casescited note 31. supra. " Turner and Dahnken v, Crowlel/. 252 Fed. 749 (9th Cir. 1918). 16 36 F. 2d 991 (S.D.N.Y.I929). COPYRIGHT LAW REVISION 79 similar omission mars Select Theatres v, The Ronzoni Macaroni 00. 86 There the principal defendant plagiarized from two copyrighted versions of "Death Takes a Holiday," the Italian original and the English adaptation. Other defendants were the sponsor of the radio program in which the infringing play was presented in 20 install­ ments, and the 2 stations over which it was presented. There was no indication that the other defendants were aware of the infringements, nor any suggestion that the plaintiffs had given them actual notice. Nevertheless, the court treated each of the 20 installments as a separate infrin