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District Court in Sixth Circuit Determines $1.95 Million in Statutory Damages for Copyright Infringement is Not Unconstitutionally Excessive

Virtual Studios, Inc. (“Virtual”) recently sued Beaulieu Group, LLC (“Beaulieu”) for copyright infringement for exceeding the scope of its one-year license to use certain photographs copyrighted by Virtual. Under Section 504(a) of the Copyright Act, a plaintiff can elect to recover the amount of actual damages or, instead, opt to receive statutory damages as compensation for its injury.  Section 504(c) provides that statutory damages can range from $750 to $30,000 per infringement, and that amount can be increased to $150,000 if it is found that the defendant’s conduct was willful.

At trial, the jury found that Beaulieu had willfully infringed thirteen different images, and awarded Virtual the maximum statutory damages amount of $150,000 per infringement.  Beaulieu then moved for remittitur of the jury’s award arguing that the award of $1.95 million violated its due process.  Beaulieu’s arguments were based upon Supreme Court precedent which held that certain punitive damages awards can be “grossly excessive,” thereby violating due process.  However, the question of whether those Supreme Court cases apply to statutory damages awards remains open.

In Zomba Enters. v. Panorama Records, Inc., 491 F.3d 574 (6th Cir. 2007), the Sixth Circuit applied due process analysis to an award of statutory damages, asking “whether the awards are ‘so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable.’”  However, the court held that such an analysis must be “extraordinarily deferential – even more so than in cases applying abuse-of-discretion review.” In another recent case, the First Circuit suggested that a statutory damages award against an individual that was 1,500 times the actual injury was not grossly excessive.

In denying Beaulieu’s motion for remittitur on December 17, 2013, the U.S. District Court for the Eastern District of Tennessee looked to such prior case precedent.    Additionally, because Beaulieu “is one of the largest carpet manufacturers in the world” with “hundreds of millions of dollars in annual sales revenue,” the court found that the jury’s verdict was neither “severe” nor “oppressive.”

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