The Second Circuit in Bryant v. Media Right Production, Inc. on April 27 , 2010, further clarified the one-work limitation in copyright litigation set forth in the last sentence of 17 U.S.C. § 504 (c)(1).
This limitation has bedeviled courts and parties because of its ambiguity. It provides that, for purposes of determining the number of grants of statutory damages, “all the parts of a compilation or derivative work constitute one work.” The question the statute raises, but does not answer, is “whose compilation” is the statute referring to. Is the “compilation” the infringed work that a plaintiff creates? Or does “compilation” refer to the infringing work that defendant creates from plaintiff’s copyrighted works?
In WB Music Corp. v. RTV Comm. Group, Inc., 445 F.3d 538 (2d Cir. 2006), the Second Circuit clarified. It held that the statue refers to a compilation or derivative work created by the plaintiff, which is then infringed. Thus, for example, if plaintiff bundles ten copyrighted works together into a CD and defendant then infringes the CD, the plaintiff will be entitled to only one grant of statutory damages. That’s because, by reason of this limitation, all the parts (or works) in that plaintiff-created compilation “constitute one work.”
But in WB Music defendant created the infringing compilation. As I discussed in Part II of my posts (that attempt to clear up some misconceptions about statutory damages) defendant there took 13 separately copyrighted songs and placed them in seven infringing CDs. The district court concluded that plaintiff was entitled to only seven grants of statutory damages. The Second Circuit reversed, finding that plaintiff had not triggered the one-work limitation because it issued its works separately, not in a compilation.
Bryant is the converse. There plaintiff created the compilation. Bryant bundled twenty of her songs into two albums which she marketed through an agent, defendant Media Right Productions. Although Bryant did not give Media Right the right to make copies of the albums, Media Right nevertheless authorized a music wholesaler, Orchard, to copy and distribute the albums by any means, including the Internet. Orchard then began selling and permitting others to download the songs included in the albums
The Second Circuit, after finding that the albums were compilations (collections of copyrighted works), affirmed the district court’s determination that each was subject to only one grant of statutory damages. Plaintiff urged that, because each song had a “separate economic value.” each should trigger a separate statutory damage award. That value, plaintiff argued, arose because “internet customers could listen to and purchase copies of each song” and infringers could use music’s digital form to break the albums apart and sell the songs separately.
Bryant explained that, under that test, a work that is part of a multi-part product may constitute a separate work for the purposes of statutory damages if it has “independent economic value and . . . is viable.” Nevertheless, Bryant declined to follow the four other circuits (the First, Ninth, Eleventh and the D.C. Circuits) that had adopted this separate economic value test.
The Second Circuit acknowledged it had no choice in this case. The court stated that the statue plainly “provides for no exception if a part of the [infringed] compilation has economic value.” The court noted its interpretation was consistent with the Conference Report that accompanied the 1976 Copyright Act, which stated this this “one-award restriction applies even if the parts of the compilation ‘are regarded as independent works for other purposes.'” Bryant added that, although digital music had “made it easier for infringers to make parts of an album available separately,” the ease of infringement was no reason to disregard the statutory language.
WB Music and now Bryant present a clear message. Once plaintiff creates a compilation (a collection of copyrighted works) and issues or distributes that compilation to the public, plaintiff will be limited to one grant of statutory damages whether defendant infringes the compilation or breaks it apart and makes unauthorized use of only some of the works included in the compilation. Thus, although a copyright-rich compilation may sell for more in the market place than a separate work, once any part of that compilation is infringed, the statutory damage award that may be assessed shrinks to one.
This result seems unfair. Copyright law is designed to stimulate creation by protecting the creators. But the last sentence of 17 U.S.C. § 504 (c)(1) appears to do the opposite. The one-work limitation, instead of stimulating creation, shelters infringement. The limitation conveniently shields infringers from multiple awards of statutory damages no matter how many works they infringe simply because the copyright owner decided to issue the works collectively. With the ease of digital technology infringers can now easily break apart albums into individually infringing songs, as in Bryant. Why continue to shelter that illegal activity with the one-work limitation?
But absent a legislative change, this limitation is now well defined in the Second Circuit.
Other Posts About Statutory Damages
Want to read Parts I, II and III of the posts that attempt to clear up other common misconceptions about statutory damages in copyright litigation? See link (Part I), link (Part II ) and link (Part III). To read some later posts criticizing the decision in Sony BMG v. Tenenbaum slashing the jury’s verdict by 90% go to link and link. For a post discussing some of the issues raised by the upcoming third trial in Capitol v. Thomas-Rasset case go to link. Still have questions about statutory damages in copyright litigation and want to see a video answering those questions, go to link or want to read an article about statutory damages written for non-lawyers, go here. Also see this link explaining when a copyrighted work qualifies as a work for purposes of fixing statutory damages.