Human Property

Are copyright damages limited in some instances?  One federal judge certainly thinks so.  On January 22, 2010, Judge Michael Davis for the District of Minnesota slashed a $1.9 million jury verdict against file-sharer Jammie Thomas-Rasset to $54,000. This amounted to an award of $2,250 per song.

Thomas-Rasset had originally been fined the $1.9 million on account of sharing 24 songs on the Kazaa network.

The RIAA had chosen to seek “statutory damages” against Thomas-Rasset.  Under the Copyright Act, a plaintiff can seek “statutory damages” instead of “actual damages.”  The minimum statutory award is $750, and the maximum is $30,000.

Since actual damages in this case would have been incredibly small (songs can be downloaded for about a buck from iTunes), the RIAA sought statutory damages, presumably to scare other file-sharers.

In explaining his decision, Judge Davis wrote that the price tag of $2,250 per song was a “reasonable limit” against a noncommercial individual and did not “veer into the realm of gross injustice.”  This represented three times the minimum statutory award of $750.

The Court further noted that Thomas-Rasset “was not a business acting for profit.  Instead she was an individual consumer illegally seeking free access to music for her own use.”  Any need for deterrence “cannot justify a $2 million verdict for stealing and illegally distributing 24 songs for the sole purpose of obtaining free music.”

Surprisingly, lawyers for Thomas-Rasset are seeking to overturn the verdict entirely.  They want a court to rule on whether or not the verdict is constitutional in the first place — a much more difficult task.  Judge Davis did not rule on this issue since he opted instead to reduce damages.

It might be better to leave well enough alone.  Challenging the constitutionality of the damage award seems like a noble task, but Judge Davis’s decision is also the first written opinion lowering a damage award for copyright infringement (and may have involved some questionable legal analysis as this blog points out).

It seems highly unlikely that the damage provisions of the Copyright Act would be thrown out by any federal judge.  Congress has express authority in the Constitution to regulate copyrights (the “Useful Arts” Clause).  And legitimate acts of Congress — including the setting of statutory damage awards — would likely be entitled to deference by a court.

An appeal seems rash and might set the way for very bad precedent the other way.  But who knows?  It seemed unlikely that Thomas-Rasset would get this far in the first place.  Maybe her legal team will be able to convince an appellate court that copyright infringement requires an actual showing of damages instead of an arbitrary Congressional estimate.

Are hundreds of thousands of dollars in damages or even permanent restriction of internet access appropriate responses to illegal online file-sharing?  What’s fair in these circumstances?

As we all start to do more things on the internet — and have access to much more creative content via the internet — these questions start to become very interesting.

To date, only two file-sharing cases have gone to trial and resulted in verdicts.  In both cases, the defendants were found liable for copyright infringement and were subject to up to millions of dollars in damages.

In the first file-sharing case, a Minnesota jury decided last summer that Jammie Thomas-Rasset was liable for $1.92 million for the infringement of 24 songs.  This amounts to $80,000 a song.

The nation’s second file sharing defendant, Joel Tannenbaum, is now asking his court for a retrial, or to reduce the $675,000 award related to the infringement of 30 songs.  This amounts to $22,500 a song.

It’s totally up to the jury to decide how much to award in damages.  The Copyright Act permits damage awards anywhere from $750 to $150,000 per infringement.  In instances of “innocent infringement,” damages can be reduced to $200, but even then, something has to be paid.  Copyright infringement is a strict liability offense.

In light of the fact that songs today can be downloaded for $1 off of iTunes, is an award of $80,000 per song for infringement reasonable?  The damage awards, on their face, would strike the casual observer as punitive, perhaps made for their deterrent effect as opposed to restitution for the infringement.

Unfortunately for these defendants, they face an uphill battle in getting a judge to reduce the verdicts.  The Copyright Act expressly permits damage awards to go into the hundreds of thousands of dollars, so it would be difficult to argue a deprivation of due process based on any lack of notice.  We’ve all seen those FBI warnings every time we rent a movie.

Then again, the Supreme Court has placed limits on punitive damage awards based on similar principles.  Even in cases where a company knew it was polluting a town’s water supply or knowingly manufacturing shoddy products, punitive damage awards are limited because due process demands some restriction on damages.   The Supreme Court has held that “few awards exceeding a single-digit ratio between punitive and compensatory damages…will satisfy due process.”  State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003).

Ultimately, the best recourse would be for Congress to modify the Copyright Act and reduce damages in cases of file-sharing so that the punishment can better fit the crime, so to speak.  But here, too, there are forces seeking even more draconian punishments, including the restriction of internet access for repeat offenders.  Such a law has just come into effect in France, and it may be only a matter of time before industry groups lobby for a similar measure in the United States.

Would Americans be okay with a law depriving people of internet access in instances where someone was repeatedly found liable for copyright infringement?  How comfortable are Americans with the idea that profit derived from creative works should trump the value associated with access to the internet?