Extraterritorial Damages in Copyright Law

A recurring fact pattern in U.S. copyright infringement litigation involves a defendant who makes an unauthorized copy of a copyrighted work in the United States; exports it to another country, where it is used to generate additional copies; and then profits from the use or sale of these copies outside the United States. Under these circumstances, the question that sometimes arises is whether a U.S. court can award damages or profits reflecting the foreign uses and sales, without overstepping traditional territorial limitations on the application of U.S. copyright law. Over the years, several courts have concluded that the answer is yes, as long as the initial act of U.S. infringement is what enabled the subsequent foreign exploitation. This Article argues that this “predicate act” doctrine is largely correct, both doctrinally and as a matter of policy, though subject to certain limitations.

More specifically, this Article argues that if the defendant proves that the defendant could have exploited the work in another country by employing a cognizable noninfringing alternative to the predicate act of domestic infringement—for example, by acquiring a lawfully made copy in the U.S. and exporting that copy for further use abroad—the only damages or profits that are properly attributable to the U.S. infringement are those that reflect the incremental loss or benefit occasioned by the defendant’s avoidance of this alternative. In such a case, consistent with the territoriality principle, the amount awarded specifically for the U.S. infringement may be minimal—though U.S. courts should be receptive to exercising jurisdiction over supplemental claims arising under foreign copyright law. In other cases, by contrast, where the defendant could not have engaged in the foreign activity without a predicate act of U.S. infringement, the courts are right to award damages or profits reflecting the foreign exploitation—albeit subject to traditional proximate cause principles and the single-recovery rule. Application of these standards will enable courts to abide by the territorial limitations of U.S. copyright law while at the same time ensuring full compensation as the facts warrant.