A US Department of Commerce task force recommended Thursday that Congress alter the Copyright Act in a bid that likely would reduce financial damages for file sharing copyright scofflaws.

The recommendations from the agency's Internet Policy Task Force don't call for doing away with the maximum $150,000 in damages available to rights holders per infringement. But if Congress adopts the task force's recommendations, it's doubtful there would be large awards, as one of the recommendations would require juries to consider a file sharer's ability to pay and, among other things, the actual value of the works that were infringed.

"We believe that litigants and courts would be well-served by requiring consideration of a uniform set of factors designed to result in an appropriate award based upon the facts of each case," said the report from the task force, which included members from the US Patent and Trademark Office, The National Telecommunications and Information Administration, and other Commerce Department entities.

Here is a verbatim list of the nine factors the task force's white paper (PDF) recommends judges or juries consider when awarding damages:

(1)The plaintiff’s revenues lost and the difficulty of proving damages.

(2)The defendant’s expenses saved, profits reaped, and other benefits from the infringement.

(3)The need to deter future infringements.

(4)The defendant’s financial situation.

(5)The value or nature of the work infringed.

(6)The circumstances, duration, and scope of the infringement, including whether it was commercial in nature.

(7)In cases involving infringement of multiple works, whether the total sum of damages, taking into account the number of works infringed and number of awards made, is commensurate with the overall harm caused by the infringement.

(8)The defendant’s state of mind, including whether the defendant was a willful or innocent infringer.

(9)In the case of willful infringement, whether it is appropriate to punish the defendant and if so, the amount of damages that would result in an appropriate punishment.

The report wasn't all rosy for copyright scofflaws facing litigation, and it said in certain circumstances, file sharers should be dinged the maximum $150,000 in damages:

With respect to file-sharing, statutory damages must take into account not merely the defendant’s personal use, but his or her acts in uploading and distributing copies to potentially numerous recipients. And while statutory damage awards of $150,000 per work are rare, there may be cases, including in the context addressed in these proceedings, where such awards are justified due to the need to deter and punish willful infringement.

Still, the white paper said that assessing damages awards on one's ability to pay only makes sense. Outrageous awards, which are rare and usually not paid, could create disrespect for copyright law:

The Task Force recognizes the concern that some awards of statutory damages can be far beyond the capacity of the defendant to pay—whether an individual or a start-up business. Requiring juries and judges to consider the defendant’s financial situation (the fourth factor) when assessing the level of the award will help address that concern. This factor is closely tied to both the deterrence and the punishment aspects of statutory damages. The amount necessary to deter a multi-billion dollar company from infringing for commercial profit will be far greater than the amount necessary to deter a private individual with limited income from engaging in noncommercial file-sharing. Similarly, a judgment of a few thousand dollars may serve as meaningful punishment for an low-income individual, but not a major corporation.

The task force noted that taking into account the value of a work could deter rights holders with unprofitable content from becoming litigation trolls:

An award that takes into account the likely heightened magnitude of harm to the market for a pre-release work may enable the copyright owner to receive a more appropriate level of compensation than an award of actual damages. On the other hand, when the infringed work is of minimal commercial value, a lower award may be appropriate. This can help address concerns about "holders of low-value copyrights... using the threat of statutory damages to turn litigation threats into a profit center."

The white paper, meanwhile, recommends the creation of a so-called "small claims tribunal" in which participation by litigants would be voluntary. This tribunal would deal with "infringement claims of relatively low economic value," and damages would be capped at $15,000 per work and $30,000 "for all damages in a single case involving a registered work."

The task force is also recommending a changeover in the so-called "innocent infringer" defense. Under the current law, those found to be innocent infringers may only have to pay $200 in damages per work. Sometimes defendants say they didn't know the work was copyrighted, but if there is a copyright notice on the work, that defense is generally barred. But not if the task force has its way.

The existence of a copyright notice should remain a factor for the court to consider when determining whether to reduce the damages award, since it may bear on the defendant’s state of mind. If a defendant asserts that he was not aware of and had no reason to believe that the work was protected by copyright, the existence of a copyright notice would tend to undermine that claim. But if a defendant mistakenly believed that he was engaging in a fair use, the notice would not undermine that defense.

The white paper found no need to recommend changes in the areas of remixing and the first sale doctrine.