It Pays to Cry Over a Copyright Infringer’s Spilt Milk.

While a copyright plaintiff has always been entitled to its infringer’s profits, last week’s decision in Graham Co. v. Haughey demonstrates how far these damages will reach. In Graham Co., an insurance brokerage firm brought copyright claims against one of its former employees and his current employer. The Graham Company claimed that the former employee used two of its manuals in sales proposals for his new employer. At trial, the jury awarded 70-75% of the infringers’ profits ($18+ million dollars) over a thirteen year period.

During post trial motions, the District Court limited damages to the three-year period immediately preceding the filing of the complaint (as opposed to the thirteen years of infringement). The Circuit Court of Appeals, however, reversed. It held that The Graham Company was entitled to damages occurring during the entire thirteen year period, because it only discovered the infringement immediately prior to commencing suit. The Court remanded the case to determine whether the damages awarded–i.e. 70-75% of the infringers’ profits–were excessive, “against the weight of the evidence” and not entirely attributable to the infringement. The District Court found that the 70-75% of the infringers’ profits could be attributable to the infringement, and thus did not “shock the judicial conscience”. The Court reinstated the jury verdict, and thus The Graham Company is now entitled to the milk split long ago.

Special thanks to Cheryl Fuchs for her contributions to this post. If you have any questions, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

http://pdf.wcmlaw.com/pdf/GCDecision.pdf

http://pdf.wcmlaw.com/pdf/GCCopyright.pdf