Compensatory damages are designed to put the copyright holder in as favorable a position as he would have been had the copyright never been infringed. Courts recognize two alternative means of calculating compensatory damages -- the economic loss to the copyright holder and the economic gain enjoyed by the infringing party. It is often difficult to prove economic loss because the copyright holder cannot demonstrate how many sales his recording would have enjoyed if the infringement had never occurred. Consequently, a court may order the infringing party to turn over his profits to the copyright holder.
In many copyright infringement cases, compensatory damages are insufficient -- the copyright holder cannot provide his losses, and the infringing party earned no significant profits. For this reason, federal law allows the holder of a registered copyright to collect statutory damages of between $200 and $150,000 per act of infringement. The exact amount of damages is determined by a federal court based on the facts of each case. Higher penalties are most likely to be assessed when the infringing party had actual knowledge that the work was copyrighted. The copyright must be registered with the U.S. Copyright Office by the time of the infringement or within three months of publication for statutory damages to be available.
Injunctions and Seizure
A court may enjoin an infringing party from committing further acts of infringement. Violation of the injunction can result in criminal penalties, including incarceration. A court can also order the seizure without compensation of all illegal copies of a copyrighted work or the temporary seizure of allegedly infringing materials pending the outcome of the infringement lawsuit.
An infringing party can be criminally charged if he commits an act of infringement after being warned by the copyright holder, typically in a "cease and desist" letter drafted by a lawyer. Advance warning alone is not enough to sustain criminal charges, however. For criminal liability to attach, the infringement must have been committed for the purpose of financial gain (regardless of whether or not the infringing party makes a profit) or must have involved the reproduction or distribution of at least $1,000 worth of copyrighted material. The maximum criminal penalty for copyright infringement is five years in prison and a $500,000 fine.