Multiple licensing fees in file-sharing?

The Higher Regional Court of Cologne (OLG Köln) had to decide whether, when offering software on the internet via a file-sharing network, a multiple of the standard licensing fee could be demanded by the sender of the cease-and-desist letter due to the multiple public making available.

The software company is claiming damages and cease-and-desist letter costs from the recipient of the warning against the unauthorised making available of the vehicle diagnostic software ESI[tronic] in an internet exchange platform. In its judgment in the first instance, the Regional Court of Cologne (LG Köln) (Az. 28 O 603/09) confirmed the alleged infringement and awarded the software company damages and legal costs in the amount of over 6,000.00 €.

With the appeal, the defendant continues to pursue his motion to dismiss. Furthermore, the recipient of the cease-and-desist letter contests the amount of damages awarded to the software company. A multiple damages claim based on licensing analogy would not be appropriate precisely because the software company would not have licensed the product in dispute without the purchase of corresponding hardware.

Decision of the court
In its decision of 23.07.2010 – Az.: 6 U 31/10 the Higher Regional Court of Cologne (OLG Köln) confirmed the first instance decision. In the view of the judges, the recipient of the cease-and-desist letter had undoubtedly downloaded the software via a file-sharing programme and made it publicly available to an unmanageable number of other internet users.

The appeal also reveals no errors in the contested judgment as regards the amount of the claims awarded. In addition to the unproblematic claim for reimbursement of expenses for the attorney's fees from the justified cease-and-desist letter, the Higher Regional Court of Cologne (OLG Köln) was also of the opinion that the assumption of a minimum damage calculated according to the licensing analogy of 5,001.00 € was not subject to objections. The chamber, which enjoyed largely discretionary power in its assessment, was correct in assuming that as a fictitious licensing fee for the unauthorised making available of the computer programme offered on the market at an undisputed four-digit price (according to the software company's information approximately 4,000.00 €, according to the information of the recipient of the cease-and-desist letter at least 1,250.00 €) in an exchange platform due to the uncontrollable number of possible exchange platform participants a multiple of the fee for a single licence appeared appropriate.
In this regard, the infringer could not rely on the fact that the software company would not have offered or licensed the software in the manner in dispute.

A penalty surcharge, as is usually imposed by the courts in other infringement cases, has not even been taken into account here.

Conclusion

In calculating appropriate damages according to the licensing analogy, the court may also take into account the extent to which an otherwise customary single licence is to be increased due to the multiple transfer occurring in exchange platforms. An additional increase to the normally payable licence may also be threatened in individual cases by a penalty surcharge to be set at the discretion of the court.
Every internet user who uses file-sharing software to "freely" download copyright-protected works must be aware that his conduct constitutes an unlawful infringement of the rights of the respective author or licensee. This judgment clearly shows that this can become very expensive in individual cases.