Statutory Damage Awards in High Profile Song-Sharing Cases

The individual defendants in two high profile peer to peer song sharing cases, Capitol v. Thomas-Rasset and Sony v. Tenenbaum, recently faced major defeats in challenges over high statutory damages awarded against them. This raises questions as to the roles of judges and juries in determining the fairness and proportionality of statutory damages in copyright infringement cases. These litigation sagas have been closely watched in copyright circles, and it is important to trace their development throughout the years to appreciate the importance of the current decisions.

Let’s first start with Capitol v. Thomas. Jammie Thomas-Rasset, a single mom of four children from Minnesota, downloaded and shared 24 songs through the now-defunct Kazaa. In 2006, six major recording companies filed a complaint against Thomas alleging copyright infringement. In 2007, a jury found Thomas guilty of willful infringement, and awarded $222,000 in damages ($9,250 per song). Thomas then filed for and was granted a new trial. After a second trial in 2009, a jury again found Thomas guilty of willful infringement and awarded statutory damages of $1,920,000 ($80,000 per song).

In 2010, the judgment was amended to remit the damages awarded to $2,250 per infringed song. The music labels then exercised their right to reject the remittitur and requested a new jury trial only on the issue of damages. After a third trial, the jury returned awarded statutory damages in the amount of $1,500,000 ($62,500 per song). In 2011, the judgment was once again amended to reduce the damages award to $2,250 per sound recording infringed. However, in September 2012, the 8th Circuit Court of Appeals reinstated the award given by the jury in the very first trial — a total of $222,000. It was as if the two previous remitturs had never taken place and Thomas was back to square one.

In Sony v. Tenenbaum, five major recording companies including Sony brought a copyright infringement action against Joel Tenenbaum, a physics graduate student at Boston University. In 2009, a jury found Tenenbaum guilty of willful infringement and returned a total award of $675,000 ($22,500 per song). Tenenbaum then filed a motion for a new trial. In 2010, Judge Gertner found that the award violated due process and reduced the award to a total of $67,500 ($2,250 per song). Judge Gertner stated in her well-crafted opinion that “the jury’s award, even as reduced, is unquestionably severe and is more than adequate to satisfy the statutory purposes and the plaintiffs’ interests.”

On appeal, First Circuit reversed the reduction in damages, vacated Judge Gertner’s ruling, reinstated the original award of $675,000, and remanded the case back to the District Court “for consideration of defendant’s motion for common law remittitur based on excessiveness.” Notably, the First Circuit recognized that “this case raises concerns about application of the Copyright Act which Congress may wish to examine.” On remand, Judge Zobel let the verdict and damages award as reinstated by the First Circuit stand. While Thomas’ lawyers have indicated that they will be appealing the decision to the Supreme Court, the Court is unlikely to consider the case, evidenced by their refusal to grant writ of certiorari for Tenenbaum’s recent petition.

As these cases suggest, prominent recording companies have taken advantage of the great latitude statutory copyright damages provide. For example, 17 USC §504(c)(1) provides copyright owners with the ability to “elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages…with respect to any one work…in a sum of not less than $750 or more than $30,000 as the court considers just.” In cases of willful infringement, 17 USC §504(c)(2) enables courts at their discretion to “increase the award of statutory damages to a sum of not more than $150,000.” Even though the primary rationale behind statutory damages is the difficulty of measuring and proving actual damages in copyright cases, these monstrous damage awards now serve as punishments and deterrents for file-sharers.

Samuelson and Wheatland point to many faults with the application of statutory damage awards in copyright infringement cases. Neither Congress nor the courts have provided guidance regarding what is “willful” or “just” within the meaning of 17 USC §504(c). Excessive and arbitrary awards can easily be awarded when skillful lawyers exercise their persuasive skills to incite juries about infringing conduct. Judges express reluctance in carefully examining or reducing exorbitant awards rendered by juries. However, perhaps the most troubling aspect is the rejection of due process concerns by the courts. Thus far, courts have refused to abide by the Gore guideposts and instead have chosen to rely on the Williams standard, which is highly deferential to the amount of damages set by Congress. Remittitur is also not always friendly to defendants, since plaintiffs have the right to refuse it and ask for a new trial, resulting in the damage awards bouncing back and forth between the courts.

Since statutory damages can be so high, it is not surprising that most defendants in similar cases prefer to settle rather than litigate. Settling makes sense from a risk management standpoint and is also a cost-effective way for courts to engage in case management. However, music labels usually have more bargaining power in settlement negotiations, so defendants like Thomas-Rasset and Tenenbaum find themselves caught in a bind.

This is not to say that individuals who knowingly download songs off the Web for free should not pay for their wrongs. A worrisome aspect of these types of cases is the high level of uncertainty courts face in adequately compensating copyright holders by fashioning redress that encompasses the wrong, but does not go beyond its scope, especially for non-commercial infringers. Thus, legislative reform that provides explicit guidance from Congress may be needed, given these recent examples of courts showing strong deference to Congress and awarding high damages in song-sharing cases against individuals.

Further Reading:

Grossly Excessive Penalties in the Battle Against Illegal File-Sharing: The Troubling Effects of Aggregating Minimum Statutory Damages for Copyright Infringement

Copyright Freeconomics

Peer-to-Peer File Sharing, Due Process, and the Judicial Role

Unconstitutionally Excessive Statutory Damage Awards in Copyright Cases

Remitting the Remittal of Joel Tenenbaum’s Remittitur Motion