This is the third installment in a series on damages available for intellectual property (“IP”) claims, focusing on copyright damages. Understanding damages is essential for two reasons: it highlights the potential rewards of building a robust IP portfolio, and it offers a benchmark for assessing risk when facing an IP claim. Our previous articles discussed trademark and patent damages.

Copyright Infringement

Copyright law protects original works of authorship, including literary, dramatic, musical, and certain other intellectual works that are fixed in a tangible form, whether published or unpublished.

Copyright infringement under the Copyright Act of 1976 involves the nonpermissive replication, distribution, performance, display, or creation of derivative works of copyrighted material.^[1] Section 504 of this act details the remedies for such infringement, indicating potential awards for actual and statutory damages. The Digital Millennium Copyright Act (“DMCA”), in its provisions for safe harbor and takedown procedures, addresses modern challenges posed by the digital environment, ensuring compliance and protecting copyright in the digital age.^[2]

Copyright Damages

To determine copyright damages, courts primarily rely on statutory guidelines under § 504 of the Copyright Act. Section 504(b) authorizes a court to award actual damages and infringer’s profits. Section 504(c) allows recovery for statutory damages; in cases of willful infringement, statutory damages may be enhanced. In exceptional cases, the prevailing party may recover attorney fees under § 505.

Actual Damages and Infringer’s Profits

Section 504(b) states that a copyright owner is entitled to recover the actual damages suffered as a result of infringement and any profits that the infringer made that are attributable to the infringement and are not taken into account in computing actual damages.

This second part of the sentence is meant to prevent double recovery. If a loss to the copyright owner overlaps with profits made by the infringer (e.g., the owner lost a sale that the infringer made), the copyright owner can’t recover both the lost sale and the infringer’s profits from the same event. However, the owner can recover profits that are made in addition to the actual damages from lost sales or are otherwise separate from the harm that the copyright owner suffered.

Actual damages are typically determined by the loss in the fair market value of the copyright, measured by the profits lost due to the infringement or the value of the use of the copyrighted work to the infringer. Infringer’s profits are calculated based on the infringer’s gross revenue attributable to the infringement.

A copyright owner is only required to present proof of the infringer’s gross revenue to satisfy the burden of proof. Once accomplished, it is on the infringer to establish any deductible expenses or profit attributable to factors other than the copyrighted work.

Statutory and Enhanced Damages

Alternatively, § 504(c) of the Copyright Act allows for a recovery method separate from actual damages and infringer’s profits. As long as a plaintiff properly registered the copyright in a timely manner before the infringement took place, a plaintiff, at any time before final judgment is rendered, may elect to collect statutory damages.

Statutory damages are generally unavailable for copyright infringement that occurs before the effective date of registration unless the copyright owner registers the work within three months of its first publication.

Once infringement is proven, the plaintiff does not need to prove actual damages to recover statutory damages. Instead, the court determines an appropriate amount within the statutory range. The statute sets the lower limit at $750 and the upper limit at $30,000—these limits apply per work infringed, not per act of infringement, and courts may assess damages for each separately registered work infringed.

If the court has found that the infringement was committed willfully, the court may increase the award of statutory damages to $150,000. However, if the infringer proves that it was not aware and had no reason to believe that its acts constituted an infringement, then the court may reduce the statutory damages award to $200.

Courts exercise broad discretion in determining the appropriate amount of statutory damages within the statutory range. Factors considered include the expenses saved and profits made from the infringer, the revenues lost by the copyright owner, the infringer’s state of mind, the deterrent effect on the infringer and others, the infringer’s cooperation in providing evidence, and the conduct and attitude of the parties.

Attorney Fees

Section 505 of the Copyright Act makes attorney fees available in exceptional cases. Attorney fees are available to either party at the court’s discretion, hinging on the nature of the case. Even when a plaintiff prevails, attorney fees are entirely subject to the court’s discretion.

In Fogerty v. Fantasy, Inc., the U.S. Supreme Court held that courts should apply equitable discretion when deciding whether to award fees and may do so based on factors like frivolousness, motivation, objective unreasonableness, and deterrent effect.^[3]

Attorney fees are generally unavailable for copyright infringement that occurs before the effective date of registration unless the copyright owner registers the work within three months of its first publication.

Summation

Copyright law uses damages not only to make the copyright holder whole but also to incentivize and reward creative expression. Given the equitable nature of these remedies, courts retain broad discretion to tailor damage awards based on the circumstances of each case, balancing compensation, deterrence, and fairness.

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Please tune in next month for part four of our series, in which we will discuss damages for misappropriation of trade secrets.

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©2025. Published in Business Law Today by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

1. 17 U.S.C. §§ 101–1332. ↑

2. Pub. L. No. 105-304, 112 Stat. 2860 (1998). ↑

3. 510 U.S. 517 (1994). ↑