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Judge Reduces Constitutionally Excessive Damages in Infringement Case

By Elizabeth Gonsiorowski

On July 9, 2010, in Sony BMG Music Entertainment v. Tenenbaum, Judge Nancy Gertner of the United States District Court for the District of Massachusetts held that a jury award of $675,000 was unconstitutionally excessive. Though the award was within the statutory range, Judge Gertner reduced it by 90% and found that it was "far greater than necessary to serve the government's legitimate interests in compensating copyright owners and deterring infringement," and that it bore, "no meaningful relationship to those objectives." Ultimately, this decision (available at: http://pacer.mad.uscourts.gov/dc/cgibin/recentops.pl?filename=gertner/pdf/tenenbaummotnewtrialjuly9th2010.pdf) may mark a shift in the way courts perceive damages for copyright infringement in the digital age, and it highlights the issues that arise when large-scale copyright holders seek damages from individuals.

In 2003, the Recording Industry Association of America (RIAA) embarked on a campaign to curb online piracy, and ended up filing proceedings against about 35,000 people. Not surprisingly, its strategy generated bad press when record companies filed proceedings against a dead person, a 13-year-old girl, and several single mothers. By 2008, the RIAA decided that the proceedings were not an effective deterrent and decided to work directly with ISPs. ("Music Industry To Abandon Mass Suits", available at: http://online.wsj.com/article/SB122966038836021137.html) Though they stopped initiating proceedings, the record companies continued to pursue suits that had already been filed.

One such suit was Joel Tenenbaum's. Unlike the defendants in the cases that proved to be public relations disasters for the recording industry, Tenenbaum doesn't garner much sympathy. His file sharing history stretches back to when kids ripped Britney Spears' (first) single off of Napster in 1999 --and continued even after the plaintiffs sent him a cease and desist letter in 2007. No matter how willful his infringement may have been, the recording companies suffered "minimal harm," and Tenenbaum did not obtain any financial gains as a result of downloading the 30 songs in question. Ultimately, the court found the jury award to be "arbitrary and grossly excessive"--with good reason.

Judge Gertner considered the fact that Congress hasn't addressed the relevant damages provisions since the Digital Theft and Copyright Damages Improvement Act of 1999, which bumped statutory damages up to their current levels ($750 to $150,000 per work for willful infringement).( 17 U.S.C. 504(c)) In deciding not to defer to Congress's statutory damages with respect to Tenenbaum's infringement, she reasoned that, "the timing of the Act suggests that legislators did not have in mind the problem of consumers sharing music through peer- to-peer networks when the Act was drafted." Though Napster was in its infancy, the legislative history did not suggest that Congress had file-sharing in mind while drafting the Act.

The court also compared the $22,500 per song jury award to the damages that recording companies have generally accepted; most cases have resulted in default judgments or settlements where the recording companies requested that the court impose the $750 minimum. Notably, in the widely publicized Thomas-Rasset case (Capitol Records v. Thomas, 579 F. Supp 2d 1210 (D. Minn. 2008)), the plaintiffs rejected a remitted award of $2,250 per song. Here, the court offered the same remitted award, and the plaintiffs (four of which were plaintiffs in Thomas- Rasset) made it clear they would not accept. "To put it mildly," Judge Gertner wrote, they "were going for broke."

If the recording industry set out to prove a point, it may have done more harm than good. If the recording companies were primarily interested in monetary compensation, the remitted award should have been more than enough -- Judge Gertner went so far as to say that the reduced award of $67,500 "is still severe, even harsh." Instead of deterring copyright infringement, as the recording industry presumably intended, this decision demonstrates the issues related to practical application of copyright laws in the 21st century, and with respect to digital piracy, it calls the foundation of statutory damages into question.

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This page contains a single entry from the blog posted on July 17, 2010 12:00 PM.

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