On May 23, 2019, a federal jury unanimously found that the Houston Independent School District willfully infringed 36 of DynaStudy’s copyrighted study guides, and awarded $9.2 million dollars. (DynaStudy, Inc. v. Houston Independent School District, Case No. 4:16-cv-01442 (S.D. Tex. May 23, 2019) (verdict, document #316). As this case illustrates, “educational” use is a very narrow exception to the copyright laws. New technologies make copying easier than ever, but the jury verdict demonstrates the damages can be unlimited.

The lawsuit dates back to 2016, when DynaStudy claimed that it had repeatedly asked the school district to halt the infringement of its copyrighted study guides. The guides included DynaStudy’s name and logo, and copyright information, as well as the legend “Copying this material is strictly prohibited.”

The lawsuit alleged that the school district had illegally copied 36 different study guides, and had removed DynaStudy’s logo and copyright registration information from 17 of the study guides. Reportedly, evidence introduced at trial included an e-mail from a teacher to a principal pointed to the no-copying legend, and the principal’s response, “I’m ok with violating it though . . . Lol.” Additional evidence reportedly included emails and evidence that employees removed or covered up DynaStudy’s logo and the copyright warnings, and then distributed these copies throughout the district, some of which ended up publicly posted online in several other states.

Infringement and “Fair Use” Analysis

The school district argued that at least some of works were not infringed because they qualified as “fair use” under the copyright law. The judge instructed the jury as to the four “fair use” factors

(1)        The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2)        The nature of the copyrighted work;

(3)        The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4)        The effect of the use upon the potential market for or value of the copyrighted work.

(Verdict at 16-17. Our readers will recognize those four factors from 17 U.S.C. § 107.) The judge elaborated on the “nonprofit” language in factor 1:

In considering the purpose and character of the work, the crux of the profit/non-profit distinction is not whether the sole motive of the use is monetary gain, but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.

(Verdict at 17.) The court also advised the jury that it could consider other factors in deciding the ‘fair use” question:

In deciding whether consider any other factors, you should be guided by the policy underlying the fair use doctrine, which is to permit limited copying from copyrighted works in specific circumstances that authors reasonably expect and that allow productive use of the work without unfairly undermining the protection accorded by copyright law.”

(Verdict, at 18.)

The jury unanimously found that all 36 study guides had been willfully infringed, and did not find “fair use.” Under Section 504(c) of the copyright law, statutory damages for willful infringement range from $750 to $150,000 per infringed work. The judge instructed the jury to apply those amounts to each guide “no matter how many times it was copied or how many copies were made.” (Verdict, at 26)

With 36 works at issue, the jury could have awarded a maximum of $5,400,000. Instead, the jury awarded the maximum amount ($150,000) for 8 of the study guides, and awarded amounts ranging from $750 to $100,000 for the remaining 28 guides, for a total of $3,478,750. (The jury verdict form does not require that the jury explain the rationale for the differing amounts.)

DMCA and “Copyright Management Information”

What may be surprising to some readers is that the majority of the jury’s award was based not on the classic infringement claim, but on the Digital Millennium Copyright Act (DMCA). The DMCA prohibits removing or altering “copyright management information,” which the judge instructed the jury meant :

(1)        The title and other information identifying the work, including the information set forth on a notice of copyright;

(2)        The name of, and other identifying information about, the author of a work;

(3)        The name of, and other identifying information about, the copyright owner of the work, including the information set forth in a notice of copyright;

(4)        Terms and conditions for use of the work; or

(5)        Identifying numbers or symbols referring to such information or links to such information.

(17 U.S.C. § 1202(c)) DynaStudy alleged violations of this provision of the DMCA in two ways: (1) by removing the “copyright management information” and (2) by distributing copies of the study guides knowing that the “copyright management information” had been removed.

The judge instructed the jury that DynaStudy had to prove

by a preponderance of the evidence (1) that HISD without authorization from DynaStudy, either (A) intentionally removed or altered any copyright management information on DynaStudy’s copyrighted works or (B) distributed copies of DynaStudy’s copyrighted works knowing that the copyright management information has been removed or altered without DynaStudy’s permission, and (2) that when HISD took such action, it knew or had reasonable grounds to know that such would induce, enable, facilitate, or conceal a copyright infringement.”

(Verdict at 33)

With respect to damages, the court pointed out that a violation occurs each time the DMCA is violated, “regardless of how many copies are made or distributed in that district.” The court clarified the standard with two examples:

For example, if a person sends an e-mail distributing a copyrighted work knowing that the CMI [copyright management information] has been removed and knowing or having reason to know that doing so would facilitate copyright infringement, that act would be a single violation regardless of how many recipients received the e-mail. However, if the same person on a separate occasion sends the same email to another group of recipients, that would be a second violation.”

(Verdict at 33)

Pursuant to 17 U.S.C. 1203(c), statutory damages range from $2,500 to $25,000 per violation. The jury found that 17 study guides were affected, with between 1 and 60 violations of the DMCA each, for a total of 246 violations. In other words, the jury could have awarded a maximum of $6,150,000. Instead, the jury awarded the maximum $25,000 award for 7 of the 17 guides, and awarded $12,500 for the remainder. The total amount of the DMCA award was $5,722,100, which combined with the infringement award for a total of $9,201,250.

Lessons Learned

The school district is reviewing the jury verdict to determine next steps, but has added annual training on copyright for all employees.

There are some general “lessons learned” from this case:

  • Many times companies are under the impression that educational fair use is broader than it in fact is, and that this case shows that even a classroom setting does not have unlimited “fair use.”
  • Anyone looking to use copyrighted materials should consider that multiple claims can arise from a single instance of copying.
  • Many people may not be aware of the consequences for removal of copyright management information, but that creates another claim with potentially multi-million dollar results.
  • For copyright owners, although it is not required that you include the copyright notice on your work, this case illustrates how important that information can be, especially if the owner can show an infringer removed that information.