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Calculating financial compensation for online copyright infringement
If you admit that you've infringed copyright, the copyright owner will usually ask that you pay a sum of money to settle the claim out of court. This sum must be reasonable and proportionate to the infringement you've committed.
This page tells you how financial compensation for copyright infringement can be worked out and whether the sum you're being asked to pay is reasonable. We refer to copyright owner but claims for compensation may also come from an exclusive licensee or a solicitor working on behalf of a copyright owner or exclusive licensee.
There are two ways to establish how much compensation can be claimed for copyright infringement:
- the value of the damage done to the copyright owner. This is called an inquiry as to damages
- the profit you have made by infringing copyright. This is called an account of profit.
Inquiry as to damages
For non-commercial copyright infringement by consumers, calculations for compensation are only made in relation to the inquiry as to damages. This refers to the amount of profit the copyright owner or exclusive licensee has lost because of your actions.
For example, if you’d illegally downloaded a film, this would usually be the amount of profit the copyright owner had lost because you didn’t rent or buy the film or go to see it in the cinema. Copyright owners should not try to claim the full retail price of the DVD or cinema ticket, only the profit they have lost.
It’s also important to know how the copyright-protected work you have infringed was available to consumers at the time you are accused of copyright infringement, to work out how much lost profit the copyright owner may claim. For example, if you have downloaded a film, and at the time the film was only available in cinemas, it would be difficult for the copyright owner to claim lost profit for buying or renting the DVD.
Account of profit
An account of profit refers to any financial profit you might have made from your actions. However, if you uploaded or downloaded material for free on peer-to-peer filesharing networks, you will not have profited financially.
An account of profit is usually used for copyright infringements in the course of business and a claim can be pursued through the civil or criminal courts. Although it's up to the copyright owner or exclusive licensee to prove in court that you've financially profited from an infringement, you should correct any misunderstanding straightaway.
If you receive any letters referring to an account of profit, it's very important that you make it clear that you have not financially profited from the infringement.
If you were profiting financially from the copyright infringement, for example you were buying or selling illegal copies, you should seek legal advice.
Example of inquiry as to damages
You download an unlawful copy of Prometheus Alien. The DVD is on general sale for £12.99. The copyright owner receives £4.00 gross profit for each genuine DVD sold. If you accept you would have bought the DVD if you had not downloaded an unlawful copy, the damage to the copyright owner is £4.00.
However, if you would not have bought a genuine copy if you had not infringed copyright as you couldn’t afford to, the copyright owner is still entitled to damages but they are calculated on the basis of a fictional royalty. This fictional royalty is usually less than lost profit. For example, a typically fictional royalty may be 10 per cent of the retail price of the DVD. In this example, the damages that the copyright owner would receive is 10 per cent of £12.99, that is £1.29.
If you’ve committed several copyright infringements, damages would be calculated for each one you made.
In practice, it’s difficult to say how much damages might be or whether they are appropriate for non-commercial infringers, such as consumers. To date the UK courts have not ruled on damages that would be appropriate for copyright infringement through peer-to-peer filesharing. Nor have they ruled on what additional damages might be appropriate.
You should not feel under pressure to agree to pay a lump sum if you are asked for it. If a copyright owner is demanding money from you, they should give you a full breakdown of the compensation and costs they are claiming. If the copyright owner doesn’t give you a financial breakdown, you should ask them to provide one, making it clear that you want to know which sums relate to compensatory damages, additional damages and which to costs.