Three Biggest Copyright Infringement Lawsuits in Business History
Copyright infringement is an ongoing problem in today’s business world. You want to protect any copyrights your company owns. You also need to be sure that you do not infringe on anyone else’s copyright. To illustrate this, we are going to examine three of the largest copyright infringement cases in light of the monetary costs to the companies found guilty of infringement.
First is the case of Sophia Stewart. Ms. Stewart is an African-American author. She contends that the Wachowski Brothers, Joel Silver, and Warner Brothers used parts of her manuscript, The Third Eye, as a basis for both The Matrix and The Terminator movies and their sequels. Ms. Stewart waged a six-year dispute with the defendants before finally winning. During her long battle with Hollywood, she faced much skepticism concerning her lawsuit. Fans of the Wachowski Brothers were especially vocal in their support for the brothers and against Ms. Stewart.
Ms. Stewart persevered and her persistence paid off. The judge ruled in her favor, awarding Ms. Stewart one of the biggest payoffs in Hollywood history. We do not know how much the courts awarded her, but both films and their sequels grossed over $2.5 billion. Her fight against the big boys shows that integrity can win over celebrity. Since Ms. Stewart won, the defendants (the Wachowski Brothers, Joel Silver, and Warner Brothers) will not only owe Ms. Stewart her fair share of the profits from both franchises, but will also be required to pay her legal bills. Fighting a six-year legal battle is not cheap.
Our next case is that of Oracle versus SAP resulting in one, if not, the largest copyright infringement verdicts. In this case, SAP’s TomorrowNow unit downloaded Oracle software hundreds of thousands of times, making unlicensed copies. TomorrowNow was a small, underperforming unit of SAP, the world’s largest business software maker.
The fact that SAP closed TomorrowNow in 2008 didn’t matter to the courts. Oracle was the company’s top competitor. Oracle alleged in their suit that TomorrowNow used the illegally downloaded software to offer technical support to Oracle’s customers, even to the point of luring Oracle’s customers and convincing them to buy SAP’s products. TomorrowNow’s automated download program even caused Oracle’s computer systems to crash. The results of TomorrowNow’s actions deprived Oracle of revenue for future product development and enticed its customers away. While TomorrowNow was a subsidiary of SAP, that did not mitigate SAP’s liability in this case. Oracle’s suit alleged that SAP was fully aware of TomorrowNow’s practices when they acquired the company in 2005, did nothing to change TomorrowNow’s practices, and might have purchased the company in large part because of the corporate espionage. Fortunately for Oracle, TomorrowNow did a poor job of stealing away Oracle’s customers.
The jury awarded Oracle $1.3 billion in the copyright infringement case. SAP tried to limit the damage award to $40.6 million. They argued for a lower award because the unit closed in 2008; a year after the lawsuit was filed. Since SAP did not contest its responsibility in the case, the jury didn’t agree and refused to lower the award. In this case, the jury awarded the 23rd largest verdict in American history.
Our third case is Baker versus Geist. This Canadian case pits the estate of Chet Baker, a leading jazz musician from the 1950’s, against Warner Music Canada, Sony BMG Music Canada, EMI Music Canada, and Universal Music Canada. The defendants are the four primary members of the Canadian Recording Industry Association (CRIA). They admit to owing Mr. Baker’s estate at least $50 million. The estimates of the full claim could amount to over $6 billion.
Mr. Baker’s estate is part of a class-action lawsuit. According to the lawsuit, the claimants had no choice but to file the suit after decades of uncontrolled infringement by the defendants. This was regrettable for the defendants as they had pursued a longstanding practice of exploit now, pay later if at all. The defendants would include copyrighted material on compilation CDs or live recordings without obtaining the required copyright licenses.
To get around the license requirements, they would note that the names of the songs on the CDs were on a “pending list.” This was supposed to show that license approval and payment was pending. This list dates back to the late 80s and came into being when Canada revised its copyright law. The new law eliminated the compulsory license and required specific authorization for each use. This opened the doors to allow the defendants to semi-legally infringe on the artists’ copyrights by openly admitting that they didn’t have permission to use the works and were not paying any royalties. This list continues to grow and now contains more than 300,000 songs. Mr. Baker’s estate is not alone in this suit and many big name artists, both Canadian and foreign, are victims of the CRIA practices.
Under the current Canadian law, the CRIA is responsible for locating the copyright owner before using their works. While some of the works could now be in the public domain or the copyright owner might be difficult to locate or determine, there is no excuse for not contacting the big name artists. Because of their unwillingness to locate and pay the artists, the record labels could face an even greater liability.
This class-action suit has opted to seek the statutory damages of at least $20,000 per infringement. A rough estimate puts the total liability at over $6 billion. In an ironic twist, the record industry uses these same numbers when an individual illegally downloads a song title. The defendants have added an additional request for punitive damages, alleging that the defendants cannot pursue harsh punishments against consumers, yet be held to a different standard for doing the same thing.
About the Author: Cory Howell is a small business owner who uses technical services consulting agreements with all of his clients. These legal contracts help keep his company safe and him from getting burned by bad customers.
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