A company is sued for copyright infringement, and the actual losses are found to be $1 but it gets hit with a $150,000 bill for additional damages. Seems like a big hit, given that the copyright holder had no direct financial loss.
On the other hand, if the infringing company had revenue of $242 million and a $27 million profit how much of a deterrent is $150,000?
The case in which this happened is a bit boring – it involved the stealing of Dynamic Supplies' file providing compatibility information for printers and computers. See, boring. Tonnex was the infringer. Whatever.
But the dollars and the result bring into focus some of the difficulties facing people trying to protect their intellectual property. Think movies, music, computer games. Piracy, IP infringement, counterfeiting, stealing – call it what you will.
The actual damage caused by each infringement may be small or nonexistent, but the combined effect on profitability, lost sales and loss of the value of IP often cannot be measured purely on economic grounds. That's why additional damages are an option for courts and victims.
IP legislation (copyright, trade marks, patents) gives the courts an unfettered discretion to award as much "additional damages" as it considers appropriate. Factors such as the flagrancy of the infringement, the conduct of the wrongdoer and the need to deter similar infringements are all considered in assessing the number.
The main point of additional damages is the deterrent effect. The idea is that, if someone else has had to pay substantial dollars for infringement, then hopefully the rest of us will think twice. To achieve that, the damages have to hurt. We think $150,000 for a multi-million dollar business is a bit soft, and isn't likely to do its job. As Harry Styles tweeted, not in relation to this issue: "If you're going to get in trouble for hitting someone...might as well hit them hard."
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