Gleason & Associates - Case Studies

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Learning About Copyright Damages

In a copyright infringement dispute, damages can be measured as the seller's (infringer's) revenues less the costs it incurred to realize those sales. As a result, a copyright owner may inflate the alleged infringer's revenue and, conversely, an infringer could inflate the expenses it incurred to generate income. The role of an objective financial analyst is to sort out what's reasonable.

Engagement
In a dispute over copyrighted educational material that also involved a breach of contract accusation, Gleason & Associates was hired by the alleged infringer, a for-profit educational institution, to conduct an analysis of potential damages.

Gleason's Role
Two types of damages are potentially applicable in copyright infringement matters: lost profits of the copyright holder and unjust enrichment of the infringer. Because the copyright owner claimed both, our analysis evaluated the owner's alleged lost royalties as well as the revenue and profits generated by the infringer as a result of its use of the copyrighted material.

Results
While the copyright owner accurately identified more than $10 million in revenue that our client had realized from the program in which the copyrighted material was utilized, our analysis determined that the alleged infringer had realized only about $75,000 of profit attributable to the copyrighted material:

The copyrighted material was only one of more than 50 components of the educational program at issue. (Courts permit the allocation of value to the infringed work based on the element of profit attributable to factors other than the copyrighted material.)
The copyright owner's analysis failed to consider the cost of instructors, administrators and other overhead that also contributed to the program's revenue generation.
Because the program existed successfully before and after the alleged infringement, the copyright owner's assertion that the program's revenue directly correlated to the usage of the copyrighted material was unfounded.