Statutory Damage Provision of Anti-Counterfeiting Amendments Act of 2004 Upheld
The Anti-Counterfeiting Amendments Act of 2004 (codified at 18 U.S.C. § 2318) makes it a crime, punishable by 5 years imprisonment and a fine, knowingly to traffic in a counterfeit or illicit documentation or packaging for a copyrighted computer program. It also creates a civil remedy, authorizing the injured copyright owner to sue to recover damages and obtain injunctive relief. In such a suit, in lieu of actual damages, the copyright owner may elect an award of statutory damages of $2,500 to $25,000 per violation.
In Microsoft v. A Plus Open, LLC, reported at 2007 WL 437776, Microsoft sued the defendants under this statute, alleging that they had distributed Microsoft Certificates of Authenticity without the corresponding Microsoft software. The defendants counterclaimed for a declaratory judgment that the civil remedy provision of the statute violates due process because the statutory damages are a criminal penalty punitive in both purpose and effect. Their principal argument in support of this claim was that the statutory damages are disproportionate to the harm caused to the plaintiff and are therefore the equivalent of a punishment.
Noting that the statutory damages remedy recognizes the difficulty in quantifying the harm that may result from counterfeiting, including the confusion of the public and damage to the copyright owner's goodwill and business reputation, the court rejected the defendants' challenge to the statute and denied their petition for declaratory relief.