Blurred Lines: on Downstream Infringement and the Disgorgement of Profits by Peter Rybolt
Downstream Infringement More Blurred Lines: On Downstream Infringement And The Disgorgement Of Profits By Peter Rybolt n copyright, as well as trademark litigation, liti- products than the rights-holder, an award of plaintiff’s gants and finders of fact face the often bewil- losses may be inadequate to Idering task of determining the extent to which ensure deterrence.2 Thus the downstream infringers—those companies one or purpose of disgorgement is, at ■ Peter Rybolt, more steps removed from the creative work at is- least in part, to ensure that an Vice President, sue—may have benefited when someone upstream infringer cannot benefit unfair- Analysis Group, Inc., has usurped another’s work. Often, the results at tri- ly from his wrongful act.3 Los Angeles, CA al are contradictory. We first review the history and Yet the disgorgement remedy E-mail: peter.rybolt@ purpose of the disgorgement remedy, identifying ten- is not intended to be punitive. sion in the case law and statutes when the subject To ensure an equitable, rather analysisgroup.com turns from competitors to downstream infringers. than punitive, outcome, the We look at three well-known cases from the world of law provides for an apportion- recorded music—including the recent Blurred Lines ment of defendant’s profits between those profits de- decision—highlighting unexplained differences in rived from the infringement and those derived from oth- the treatment of record companies when songwriters er, presumably legitimate, sources. As a matter of form, are accused of infringement. We then review our un- plaintiff’s burden is to establish only the infringer’s gross derstanding of how firms capture value, and illustrate revenue; the infringer must identify deductible expenses how that understanding can lend guidance to juries in as well as any “elements of profit attributable to factors assessing the profits to be disgorged.
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