This week, we are pleased to have a guest post from Intellectual Property + Technology Group co-chair John L. Cordani, Jr. and Business Litigation Group lawyer, Janet J. Kljyan.
We have seen a noticeable uptick in lawsuits commenced by “copyright trolls” in recent years, including against businesses in the manufacturing space. The Supreme Court is currently considering a case that could have a significant impact on the viability of typical copyright troll claims and, more broadly, the continued prevalence of copyright trolling.
Copyright trolls file lawsuits for the purpose of extracting a settlement in an amount, making defense of the case difficult to justify rather than to actually protect a copyright. They are plaintiffs who are in the business of being plaintiffs.
Copyright trolls are often law firms or led by lawyers and tend not to be the original creators of the copyrighted work. Such entities purchase the right to “enforce” a copyrighted work—usually images or photographs—and then use technology to scour the internet for instances of allegedly infringing uses of the work (such as images used in blogs, business websites, and social media pages). Businesses like manufacturers with a public website or internet presence featuring stock images are vulnerable to such demands. The demand letters often try to intimidate the recipient and extract a relatively large settlement for what is often an insignificant infringement. Such letters can be misleading about the remedies a court will realistically award. Their victims tend to be smaller and mid-sized businesses that may be more likely to be intimidated by the demand letter and less likely to involve attorneys early on.
Copyright trolls take advantage of certain aspects of the United States Copyright Act to advance their goals. Demand letters almost always discuss how the court can theoretically award significant “statutory damages” without the plaintiff having to prove actual damages. Statutory damages can range from $750 to $30,000 per copyrighted work and can go as high as $150,000 if the infringement is proven to be “willful” (knowing and intentional). The Copyright Act also sometimes allows a successful plaintiff to recover its attorneys’ fees from the other party.
Although the Warner Chappell Music v. Nealy case being considered by the Supreme Court does not directly deal with copyright trolling, it will resolve an important question about the statute of limitations and availability of damages that has the potential to take the wind out of trolls’ sails. Copyright trolls frequently rely on stale infringements, such as photographs published on the internet more than three years prior to the demand letter. Thus, the Supreme Court’s decision on the timeliness of claims could limit the viability of the type of claims typically brought by trolls. During the oral argument held on February 21, 2024, several Justices expressed skepticism about the so-called “discovery rule” that lower courts have used to allow copyright plaintiffs to pursue claims about old infringements.
Given the complexity of this issue and the uncertain future of the discovery rule, it is important to stay abreast of the status of the law and to confer with an attorney when a demand letter from a copyright troll is received. While a copyright troll’s demand letter may make the validity of a copyright claim seem black-and-white, the devil is in the details. The recipient of a demand letter should undertake a factual investigation into issues such as the origin of the copyrighted work, third-party licensing, the timing of the alleged infringement, and the alleged copyright registration to assess the strength of their defenses and the availability of statutory damages and attorneys’ fees.