The Sum of All Damages

Picture this: Over the weekend, your son's friend drops by wearing an obnoxious new T-shirt. But what really upsets you is that in the middle of the shirt is a character from a familiar video game, a game your company released a few months back and which has been flying off the shelves ever since. Your worst fears are realized when you learn the shirt was purchased from a Web site that is offering all sorts of clothing and merchandise featuring characters from the game, all of which is unauthorized.

You quickly dial your IP attorney. After you explain the situation and ask what your company's options are, she asks you the million dollar question: “Did you register the copyright for the game?”

“No, and I don't have to,” you quickly respond. “My last IP attorney explained to me that your copyright exists when you create the work, and that you don't have to register the work to protect your copyright.” You decided at the time to save money and not register copyrights, unless there was a good reason.

That decision to be frugal may cost you in the long run. While you initially saved the $45 registration fee and a few hundred dollars in attorney fees, you can't effectively do anything until you have a registration. The problem is, you need one immediately in order to try to shut down the Web site selling those T-shirts. But it will take time and, of course, money. Your attorney explains that you can request “special handling” at the copyright office. This usually gets you a registration in about two weeks (as opposed to about six months for a typical application) but it will cost you about $700, plus attorneys' fees. And that's just the good news.

Here's the bad news: Without a registration, you usually can't get into court to stop the infringement. Knock-offs are a great target for preliminary relief like temporary restraining orders, or preliminary injunctions. Your registration is your admission ticket to court. At a minimum, you'll need to wait several weeks to get to court, while the Web site keeps operating and making profit.

You can't stop the bad guys through import limitations either—at least, not yet. One of the benefits of copyright registration is the ability to file with U.S. Customs, and have infringing goods seized. Again, it's another lost opportunity on your part.

Finally, once you have your registration and are in court, you may have lost two of your biggest clubs to wield. With limited exceptions, unless you register your copyright before the infringement begins, you cannot collect statutory damages (which can get you up to $150,000 per work). And you cannot recover your attorneys' fees, which are bound to be several hundred thousand dollars, at a minimum.

Copyrights are among the most powerful IP weapons toy and game companies can have in their arsenals. Know when to spend a little to have them ready—so you can quickly stop the bad guys.