While the new statutory damages provision may create a ceiling of $500 in damages for certain infringements, it also creates a minimum that is higher than the current statute. The drafting is complex, but the change is as follows:
1. Under the current Copyright Act, the statutory damages provisions sets a minimum of $500 per infringement and a maximum of $20,000. However, there are two exceptions that can reduce the minimum. First, Section 38.1(2) provides that
Where a copyright owner has made an election under subsection (1) and the defendant satisfies the court that the defendant was not aware and had no reasonable grounds to believe that the defendant had infringed copyright, the court may reduce the amount of the award to less than $500, but not less than $200.
Moreover, Section 38.1(3) provides that the court can go below $200:
(a) there is more than one work or other subject-matter in a single medium, and
(b) the awarding of even the minimum amount referred to in subsection (1) or (2) would result in a
total award that, in the court's opinion, is grossly out of proportion to the infringement, the court may award, with respect to each work or other subject-matter, such lower amount than $500 or $200, as the case may be, as the court considers just.
Section 38.1(5) sets the criteria for the judge to consider in such a case. In other words, the courts ultimately have discretion with statutory damages to award what they believe is just.
2. Once the new $500 statutory damages provision kicks in, the court's discretion is removed. The new Section 38(1.1)(2) provides that:
If subsection (1.1) does not apply and the defendant satisfies the court that the defendant was not aware and had no reasonable grounds to believe that the defendant had infringed copyright, the court may reduce the amount of an award under subsection (1) to less than $500, but not less than $200.
The later discretionary provision that permits damages below $200 specifically excludes this new statutory damages provision. The net effect is a removal of discretion under the $500 provision to go below $200. The creation of judicial discretion to go below statutory minimums was a necessary safeguard against unfair damage awards. The new $500 maximum may address the issue in another way, however, there remains uncertainty about how the provision will be applied. I believe the court discretion should apply to all current and proposed forms of statutory damages.