a) Lost SalesIf a right-holder’s business is selling the protected product, it can obviously recover its lost net
profit on sales the infringer took from it by selling competing products. The infringer cannot
escape by proving it could have sold a non-infringing substitute. A publisher once sold a school
anthology containing a major section of a novel without obtaining copyright clearance. It had to
compensate both the author for lost royalties and a rival publisher, who owned the copyright, for
the latter’s profit on sales lost from the competition.An infringer may also undercut prices because it does not have the claimant’s start-up cost (e.g.,
research, development, and market creation). A claimant reducing prices to meet this
competition can also recover for its lost margin and any general business decline — for example,
if the infringer produces an inferior product that makes the market turn against the claimant’s
product as well.b) Reasonable RoyaltyWhat if the copyright holder could never have made the infringer’s sales – for example, they
would have gone to other competitors, or the infringer created a new market? The copyright
holder is then entitled to damages based on a reasonable licence fee on those sales. For right-
holders in the licensing business – for example, copyright collecting societies – this amount is
the actual royalty fee they would have charged the defendant for a licence. A video store that
wrongly copies videotapes for rental has to pay as damages the licence fee the copyright owner
charges comparable video stores that acquire lawful copies. If the right-holder never licenses
(e.g., a painter who sells only originals and turns away all attempts to persuade him to allow
reproductions of his work to be made or sold), then a notional reasonable royalty fee may be set:
what a willing licensor and licensee in the shoes of the particular parties would have negotiated
under existing market conditions. The factors real-life negotiators, acting reasonably with a view
to reaching an agreement, would use in that line of business are then taken into account: for
example, comparable fees for comparable licences anywhere, the infringer’s savings and profits,
and any admissions by either party of the figure it would be willing to accept as a royalty. ...[T]he reasonable royalty formula is ultimately a device to prevent unjust enrichment: the
infringer is treated like the car thief, who has to pay the owner a reasonable rental for the time
the owner was deprived of her property, even if the owner had put the car in storage for the
winter. Neither party can avoid a calculation on this basis by saying that, in the real world, he
would never have entered into licence negotiations with the other or would have settled only for
other-worldly rates. ...c) Intangible LossesInfringements may sometimes cause right-holders intangible losses. For example, someone who
puts up a building infringing an architect’s plans may deprive the architect of the reputation that
would have come her way from news of the building (placards on the site, etc.). Damages for
copyright infringement may compensate for this lost credit. Sometimes, too, damages can cover
embarrassment and distress, as when a national newspaper publishes a private photograph
without copyright clearance.d) Apportioning DamagesDamages may sometimes need to be apportioned. An infringer who takes one chapter from a ten-(^162) chapter book should pay damages only on the loss caused by taking that chapter. Exceptionally,