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A Maryland federal court declined on Feb. 11 to disturb a $19.7 million copyright infringement verdict against the investment firm Legg Mason. In a case of apparent first impression, the court held that the U.S. Supreme Court’s Gore and State Farm decisions-and their recommended limits on punitive damages-did not apply to statutory damages in copyright infringement actions. Lowry’s Reports Inc. v. Legg Mason Inc., No. WDQ-01-3898 (D. Md.). Founded in 1938, Lowry’s provided investment information at the close of each market day based on data compiled with Lowry’s proprietary algorithms. For more than a decade, Legg Mason had paid for only one subscription to Lowry’s New York Stock Exchange Market Trend Analysis. Lowry’s sent the newsletter to Legg Mason researcher Linda Olszewski. Although Lowry’s required all subscribers to execute an agreement against unauthorized dissemination of the newsletter and its data, Olszewski e-mailed the newsletter to Legg Mason colleagues, and the firm posted its contents on its companywide intranet. Alleging that Legg Mason continued the unauthorized dissemination of its content even after it sent the investment firm a cease-and-desist letter, Lowry’s sued Legg Mason for infringement under the Copyright Act of 1976. A Baltimore jury found that Legg Mason willfully infringed. It awarded Lowry’s $19,275,270 in damages, including $50,000 for each of act of infringement it found Legg Mason committed before Lowry’s demanded it stop and $100,000 for each act of infringement after Lowry’s demand. Legg Mason moved for a new trial and judgment as a matter of law, arguing that the verdict was excessive and violated due process under the U.S. Supreme Court’s decisions in BMW of North America Inc. v. Gore, 517 U.S. 559 (1996) and State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S. 408 (2003). In Gore, the high court established guideposts for determining punitive damages and in State Farm, while declining to establish a bright line test, it said, “in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process.” Rejecting Legg Mason’s argument and upholding the verdict, the Maryland federal court declined to apply Gore and State Farm to statutory damages in copyright actions. It said, “The Gore guideposts do not limit the statutory damages here because of the difficulties in assessing compensatory damages in this case. Statutory damages exist in part because of the difficulties in proving-and providing compensation for-actual harm in copyright infringement actions.”

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