Last week, the U.S. Department of Commerce issued a long-awaited report titled White Paper on Remixes, First Sale, and Statutory Damages, which recommends amendments to U.S. copyright law. The task force report makes recommendations on three separate issues referenced in its title, though with respect to remixes and the first-sale doctrine, the recommendation is to do nothing at this time.

Statutory Damages

The report’s substantial proposals focus on the Copyright Act’s statutory damages provision (17 U.S.C. § 504) in cases against individual file sharers and online services that may be secondarily liable for infringement of a large number of works. In those cases, the report suggests a system whereby judges and juries consider nine specific factors in assessing statutory damages for copyright infringement. The proposed factors are:

  1. The plaintiff’s lost revenues and the difficulty of proving damages.
  2. The defendant’s expenses saved and profits reaped, and other benefits from the infringement.
  3. The need to deter future infringements.
  4. The defendant’s financial situation.
  5. The value or nature of the work infringed.
  6. The circumstances, duration, and scope of the infringement, including whether it was commercial in nature.
  7. In cases involving infringement of multiple works, whether the total sum of damages, taking into account the number of works infringed and number of awards made, is commensurate with the overall harm caused by the infringement.
  8. The defendant’s state of mind, including whether the defendant was a willful or an innocent infringer.
  9. In the case of willful infringement, whether it is appropriate to punish the defendant and, if so, the amount of damages that would result in an appropriate punishment.

Another proposed change concerns establishing culpability. Under the current law, if the copyrighted work is published with a copyright notice, an accused infringer cannot claim to be an “innocent” infringer and therefore is not entitled to a reduced award of statutory damages (an award as low as $200 per work). The proposal removes that bar and instead merely makes a notice “relevant” to the innocence calculus.

Third, in cases involving non-willful secondary liability for online services offering a large number of works, the proposed changes include providing courts with discretion to assess statutory damages other than on a strict per-work basis. Under the law currently, an award of statutory damages is made based on each copyrighted work infringed. Under the new test, the calculation would include the nine-factor damages test set forth above. Importantly, the proposed changes do not include a mechanism for increasing statutory damages, e.g., by allowing multiple awards based on the number of uses of a single work.

First-Sale Doctrine

One of the main issues concerning the first-sale doctrine was whether to expand or clarify the existing law with respect to digital copies of works. The report concludes that though the first-sale doctrine may be called into question in light of new technologies, markets, and innovative business models, “[a]mending the law to extend the first-sale doctrine to digital transmissions of copyrighted works is not advisable at this time.”

Remixes

The report includes exhaustive discussions of “remixes” of copyrighted works, including digital sampling, fan fiction, and additive visual arts works. Despite not making any recommendations to amend the law, the report does make several recommendations to make the fair-use guidelines more understandable to remixers.