What is the least expensive way to settle a Strike 3 case?

The purpose of your receiving a Strike 3 subpoena directed to your Internet Service Provider (“ISP”) seeking your IP address is to motivate you to pay Strike 3 to settle the case before they obtain your name and other personal information. That raises the obvious question: how much will you have to pay?

Obviously, there is no way of knowing precisely what the demand will be, or whether it can be negotiated downward, in a given instance. However, from having handled many of these cases, our law firm has seen certain patterns that might be helpful in beginning that (albeit, speculative) analysis. Here are a few of them.

1. The settlement might be based upon the number of videos downloaded.

One of the issues to consider is how many of the Strike 3 videos were downloaded. Presumably, one must take into account not so much the number of times each of those videos was downloaded, as the number of different videos that were downloaded. The reason is rooted in the copyright statute. Let’s take a look at some specifics below.

2. The copyright statute provides a baseline formula for calculating statutory damages per infringement.

The copyright statute was passed by Congress to address the fact that it was particularly difficult to calculate the damages a copyright owner would suffer from an infringement. In other words, there would be a right (to be free from infringement) without a remedy (to obtain more than nominal damages). Accordingly, the copyright statute served to enhance and augment those potential damages. It states in pertinent part at 17 U.S.C. § 504(c)

(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work. (Emphasis added).

Based upon this provision, one must take into account the range between the low of $750 and the high of $30,000 in computing the damage calculation, and then offset that against the value to Strike 3 of settling early before the case really begins in earnest.

3. Can the settlement be calculated on a higher figure?

Of course, in theory, the settlement could be calculated on a higher figure than even the upper limit of the normal damage range of between $750 and $30,000 per infringement. For example, the statute refers to a higher limit if “the court finds that infringement was committed willfully.”

(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000.  (Emphasis added).

The reason this is relevant is that the Strike 3 alleged infringements are typically premised upon downloads that were allegedly intentional. It may be difficult, though not impossible (see below), to assert that a person inadvertently downloaded specific adult videos.

4. Can the settlement be calculated on a lower number than $750 per infringement?

The copyright statute provides for a reduction in the normal minimum damages award of $750 per infringement. Specifically, that number can be reduced to $200 per infringement if the infringer was “not aware and had no reason to believe” that they were infringing.

In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200. (Emphasis added.)

While, as stated above, it may be difficult to prove that someone downloaded specific titles inadvertently, it is not impossible. In such a case, it might be worthwhile to seek to lower the per infringement figure for settlement from $750 to $200. Whether that will work in a given case cannot be known in advance.

5. Does the fact that the downloads were taking place anonymously enter into the damage calculation?

One last point that needs to be kept in mind: the copyright statute actually contemplates that the infringement was willful if it was done using “materially false contact information.” The reason this is important is it can result in a potential damage award based upon the higher maximum threshold of $150,000. The specific language of the copyright statute addressing this issue is as follows:

(3)(A) In a case of infringement, it shall be a rebuttable presumption that the infringement was committed willfully for purposes of determining relief if the violator, or a person acting in concert with the violator, knowingly provided or knowingly caused to be provided materially false contact information to a domain name registrar, domain name registry, or other domain name registration authority in registering, maintaining, or renewing a domain name used in connection with the infringement.

Conclusion

It is impossible to know for sure how a potential settlement with Strike 3 will be calculated in a given instance. Indeed, even taking the parameters set forth above into account, there are always the specific facts of the case that may play a role, such as

• the alleged infringer’s ability to pay the award (i.e. financial hardship);
• whether the settlement will be paid over time or more quickly in a lump sum; and
• whether the ISP has already revealed the name of the alleged infringer or whether it is still being kept confidential for the time being.

Internet Technology Legal Counsel with Nissenbaum Law Group

The Nissenbaum Law Group welcomes inquiries from potential clients  who receive subpoenas or complaints from Strike 3 alleging copyright infringement. Explore our Internet Law practice area page.

Publications & Presentations

Gary D. Nissenbaum, Esq.

• Augmented Reality: Gotta Protect That IP, by Gary D. Nissenbaum, Esq. and Laura J. Magedoff, Esq., Apptentive, September 22, 2016
• Profiled in: Gary D. Nissenbaum: Ace Gaming Attorney, by David Radd, Gamesauce, September 10, 2016
• The Increasing Pace of Digital Change: Why Does Our Culture Always Seem so Blindsided?, Huffington Post, August 4, 2016
• The Intriguing Legal Ramifications of Pokémon GO, BrettTerpstra.com, July 25, 2016
• Potential Legal Approaches to a Cyberbullying (Co-author), The Young Lawyer, American Bar Association Young Lawyers Division, 2013
• Receiving Classified Information: Government Secrecy and the Litigation Process(Co-author), NJ Lawyer Magazine, October 2009
• Wrongful Posting on the Internet: The Privacy You Save Could be Your Own, NJ Lawyer Magazine, April, 2008
• 3/1/18 Interview of Mr. Nissenbaum, Systematic, “The Psychodynamics of Lawyering with Gary Nissenbaum”
• 1/22/18 Interview of Mr. Nissenbaum, Game Dev Unchained, “The Indie Legal Guide With Gary Nissenbaum”
• 11/21/17 Interview of Mr. Nissenbaum, Gamesindustry.biz Podcasts, “Licensing Your Intellectual Property”
• 11/3/17 Interview of Mr. Nissenbaum, Developer Tea Podcast, “The Future (and Past) of Legal for Developers w/Gary Nissenbaum (part 1)”
• 11/3/17 Interview of Mr. Nissenbaum, Developer Tea Podcast, “The Future (and Past) of Legal for Developers w/Gary Nissenbaum (part 2)”
• 10/19/17 Interview of Mr. Nissenbaum, Complete Developer Podcast, “Developers and the Law”
• 10/13/17 Interview of Mr. Nissenbaum, Hansel Minutes Podcast, “Latest Developments in App and Website Law Regarding Clickable Terms and Conditions”

Laura J. Magedoff, Esq.

• Augmented Reality: Gotta Protect That IP, by Gary D. Nissenbaum, Esq. and Laura J. Magedoff, Esq., Apptentive, September 22, 2016
• Potential Legal Approaches to a Cyberbullying Case (Co-author), The Young Lawyer, American Bar Association Young Lawyers Division, 2013
• New York County Lawyer’s Association, EMIPS Committee Comments to New York State Bar Association Report of the Privacy Task Force, Contributing Author, March 2009
• Wrongful Posting on the Internet: The Privacy You Save Could be Your Own, NJ Lawyer Magazine, April, 2008
• Panelist, Intellectual Property Protection & Enforcement, New Jersey Bar Association Annual Conference, Atlantic City, NJ, May 2017
• Panelist, Empower – I Create Nothing. I Own it: A Panel about Establishing and Protecting your Intellectual Property as a Business Asset, New Jersey Association of Women Business Owners’ Annual Conference, New Brunswick, New Jersey, October 2010
• Moderator, Engage – The most Powerful Commodity I know is Information, New Jersey Association of Women Business Owners’ Annual Conference, New Brunswick, New Jersey, October 2010
• Panelist, Casino Law 2010: Game On!, 2010 South CLEFest, Atlantic City, NJ, August 2010
• Presented Seminar, Protecting Your Online Image, Various 2009-Present