Assessing Challenge To Damages in File-Sharing Litigation

It remains to be seen whether the RIAA's revised litigation strategy will continue to include use of the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 (the Act). The Act provides for increased statutory damages for copyright infringement, particularly willful infringement, and is the centerpiece of much of the public relations nightmare. Individuals accused of music piracy have challenged the statutory scheme that permits this compensation by evoking the U.S. Constitution in the courts of law and appealing to the emotional sensitivity of the masses in the court of public opinion.

Thomas and Tenenbaum

Capitol v. Thomas, 579 F.Supp.2d 1210 (D. Minn. 2008), was the first file-sharer case to go to trial. While the jury in that case awarded the RIAA statutory damages of $222,000, the dispute continues because the court granted a new trial after holding that simply making a music file available in a shared file does not violate copyright law. The ruling threw into question whether the RIAA will collect the damages award.

In a more recent case, Sony BMG Music Entertainment v. Tenenbaum, 1:07-cv-11446 (D. Mass.), the RIAA faces a 24-year-old graduate student and a Harvard Law professor in the U.S. District Court for the District of Massachusetts. Sony BMG sued Joel Tenenbaum for copyright infringement. Tenenbaum filed a counterclaim for abuse of process. Tenenbaum argued that Sony BMG did not file suit against him to obtain compensation for any purported injury, but rather to bully him into settlement and to make an example of him. Defendant's Counterclaim, at 2-3.

Professor Charles Nesson, founder of Harvard's Berkman Center for Internet and Society, now represents Tenenbaum. Nesson has advanced a constitutional argument that the copyright laws violate the Constitution by permitting a private actor ' the RIAA ' to enforce a statute that is largely criminal in nature using civil process. Defendant's Opposition to Plaintiff's Motion to Dismiss Counterclaim, at 4. Tenenbaum also argues that the statutory damages scheme established by the act is wholly disproportionate to the actual harm the RIAA has endured. Id. at 7-19.

There are some difficulties with Tenenbaum's arguments. First, Sony BMG asserts a private right against Tenenbaum. Private corporations, such as Sony BMG, have certain private rights just as private individuals do. Among these private rights is the right to protect the creative achievements of its employees from infringement. In a recent memorandum to the court, Nesson analogized the RIAA's actions under the copyright laws to a scheme in which a private actor would be able to arbitrarily enforce speeding laws and seek punitively high fines. Id. at 5. Sony BMG argues that this analogy fails to differentiate between private rights, such as intellectual property rights, and public rights, such as safe roads.

Antitrust Issues

The ability of private individuals to protect their rights from acts punishable by criminal penalties in civil courts is hardly exclusive to the area of music piracy. Federal and state statutes provide for private enforcement of antitrust and employment laws when private entities are harmed by the violation of these laws. See, e.g., 15 U.S.C. '1, 29 U.S.C. ”1131-32.

For example, federal antitrust laws, embodied largely in the Sherman and Clayton Acts, provide for punitive criminal fines and penalties for their violation. See, 15 U.S.C. '1. The antitrust laws also provide for enforcement through private actions for damages. See, 15 U.S.C. '15. The antitrust laws faced the constitutionality question very early on, and their constitutionality has been upheld by the courts despite the fact that antitrust violations are criminal acts for which a civil remedy has been provided. See, e.g., Chattanooga Foundry & Pipe Works v. Atlanta, 203 U.S. 390, 396-97 (1906).

Conversely, a difference between Tenenbaum's situation and those brought under antitrust provisions is that, in Tenenbaum's case, it is a single, unsophisticated individual facing a monumental monetary judgment rather than a megacorporation malfeasor better situated to withstand such a judgment. Although this difference likely contributed to the RIAA's decision to revise its litigation strategy based on public relations, it does not likely render Tenenbaum's argument that the copyright laws are unconstitutional any more forceful.

The argument that the Act creates a criminal statutory scheme has some weaknesses because the Act protects private, rather than public, rights. The law has long protected private rights from criminal acts by permitting the aggrieved parties to bring civil suits for compensatory damages.

Examples of the dichotomy between criminal and civil actions arising out of the same set of facts are murder (criminal) and wrongful death (civil). When an individual is charged with murder, the potential for criminal penalties in the form of a lengthy incarceration looms large. Because of the enormity of this penalty, it is easy to forget that the potential for civil damages often accompanies such a charge. The law desires to make whole those suffering injury at the hands of others, which is why it permits private parties harmed by criminal acts to bring civil suits.

Congressional Action Possible

Tenenbaum and Nesson's argument that the damages the Act provides for are disproportionately high is unlikely to result in the court finding the act unconstitutional. While Tenenbaum's proposition may have a certain appeal, given the difference in the size and sophistication of the parties on either side of these cases, this appeal is emotional rather than legal. The fact that there is an argument, however, may result in congressional intervention.

Judge Michael Davis, who presided over the Capitol v. Thomas case, articulated a need for congressional action to avoid situations in which individual plaintiffs not acting for profit are required to pay damages hugely out of proportion to the damage they cause. Davis, in his opinion granting a new trial, explained that the damages awarded to plaintiff Capitol Records were likely hundreds of times larger than any monetary harm Jammie Thomas may have caused the recording industry. While Davis acknowledged the need for enhanced damages to deter music piracy, he questioned the need for damages as high as currently called for by the Act, and called for Congress to rethink the statutory scheme.

Excessive Damages?

Certainly, high statutory damages awards might give the court pause, particularly when the alleged copyright infringer is an individual who did not seek to profit from his infringement. Tenenbaum argues that, while statutory damages in copyright cases originally served the legitimate purpose of compensating victims of copyright infringement in cases in which determination of actual damages was difficult, the statutory scheme has led to a departure from this legitimate purpose. Defendant's Opposition to Plaintiffs' Motion to Dismiss Counterclaim at 8-9.

Instead, Tenenbaum argues, the RIAA and its members now attempt to use the statutory damages scheme as a deterrent, which Tenenbaum suggests is improper. Id. For the court to accept this argument would require the adoption of new precedent, however, as Tenenbaum's documents to the court have failed to refer the court to a single case in which statutory damages as deterrent were found to present a constitutional problem.

Tenenbaum has also argued that these high damages rise to the issue of violating the due process clause of the Fourteenth Amendment. Id. at 7. Due process, Tenenbaum argues, forbids damages award that are excessive in relation to the interests violated in a particular case. Tenenbaum has failed to find any support in the case law, however, to support his position that disproportionate damages create a due process problem. BMW v. Gore, 517 U.S. 559 (1996), upon which Tenenbaum heavily relies, stands more for the proposition that a punitive damages award is unconstitutionally excessive when the defendant has no notice of the enormity of potential damages. Tenenbaum's case is different simply because Tenenbaum was presumptively aware of the potential damages for which the act provides, as these damages are specifically enumerated in the Act.

Conclusion

While Tenenbaum's position is contradicted by case law, his stance has caused a change in the RIAA's litigation strategy. The public outcry may also lead to a congressional review of the Act and its damages award. It seems that this awareness has fostered an understanding by the RIAA that aggressive litigation may no longer be the best strategy.

One cannot seriously suggest, however, that the recording industry should abandon all litigation attempts to protect its intellectual property rights. To the extent that its relationships with the ISPs do not cause consumers to cease ongoing infringement, the RIAA is well within its right to sue under the Act and other copyright laws. The creative achievements of musical artists make the recording industry profitable, and it needs to protect its rights to commercialize those achievements.

The recording industry estimates that music piracy has cost it billions of dollars during the past 15 years. Facing the potential for an industry-wide collapse, the Recording Industry Association of America (RIAA) undertook its aggressive litigation campaign to protect itself and its constituents from copyright infringement by suing individual file sharers. After fighting a public relations battle over some of its tactics, the RIAA has chosen to temper its aggressiveness. The RIAA is instead forming relationships with ISPs that maintain the online accounts of the consumers.

Partners with ISPs

With the ISP relationship, the RIAA will be able to bypass filing a lawsuit to determine a consumer's name and other information, previously a requirement to obtain the information. With the revised strategy, the ISP will be the consumer contact, sending out e-mails to request cessation of infringement. If the consumer does not heed the warning, he or she may risk having the ISP shut down the Internet access. Alternatively, the RIAA may file a lawsuit, depending on the particular infringement.

It remains to be seen whether the RIAA's revised litigation strategy will continue to include use of the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 (the Act). The Act provides for increased statutory damages for copyright infringement, particularly willful infringement, and is the centerpiece of much of the public relations nightmare. Individuals accused of music piracy have challenged the statutory scheme that permits this compensation by evoking the U.S. Constitution in the courts of law and appealing to the emotional sensitivity of the masses in the court of public opinion.

Thomas and Tenenbaum

Capitol v. Thomas , 579 F.Supp.2d 1210 (D. Minn. 2008), was the first file-sharer case to go to trial. While the jury in that case awarded the RIAA statutory damages of $222,000, the dispute continues because the court granted a new trial after holding that simply making a music file available in a shared file does not violate copyright law. The ruling threw into question whether the RIAA will collect the damages award.

In a more recent case, Sony BMG Music Entertainment v. Tenenbaum, 1:07-cv-11446 (D. Mass.), the RIAA faces a 24-year-old graduate student and a Harvard Law professor in the U.S. District Court for the District of Massachusetts. Sony BMG sued Joel Tenenbaum for copyright infringement. Tenenbaum filed a counterclaim for abuse of process. Tenenbaum argued that Sony BMG did not file suit against him to obtain compensation for any purported injury, but rather to bully him into settlement and to make an example of him. Defendant's Counterclaim, at 2-3.

Professor Charles Nesson, founder of Harvard's Berkman Center for Internet and Society, now represents Tenenbaum. Nesson has advanced a constitutional argument that the copyright laws violate the Constitution by permitting a private actor ' the RIAA ' to enforce a statute that is largely criminal in nature using civil process. Defendant's Opposition to Plaintiff's Motion to Dismiss Counterclaim, at 4. Tenenbaum also argues that the statutory damages scheme established by the act is wholly disproportionate to the actual harm the RIAA has endured. Id. at 7-19.

There are some difficulties with Tenenbaum's arguments. First, Sony BMG asserts a private right against Tenenbaum. Private corporations, such as Sony BMG, have certain private rights just as private individuals do. Among these private rights is the right to protect the creative achievements of its employees from infringement. In a recent memorandum to the court, Nesson analogized the RIAA's actions under the copyright laws to a scheme in which a private actor would be able to arbitrarily enforce speeding laws and seek punitively high fines. Id. at 5. Sony BMG argues that this analogy fails to differentiate between private rights, such as intellectual property rights, and public rights, such as safe roads.

Antitrust Issues

The ability of private individuals to protect their rights from acts punishable by criminal penalties in civil courts is hardly exclusive to the area of music piracy. Federal and state statutes provide for private enforcement of antitrust and employment laws when private entities are harmed by the violation of these laws. See, e.g., 15 U.S.C. '1, 29 U.S.C. ”1131-32.

For example, federal antitrust laws, embodied largely in the Sherman and Clayton Acts, provide for punitive criminal fines and penalties for their violation. See, 15 U.S.C. '1. The antitrust laws also provide for enforcement through private actions for damages. See, 15 U.S.C. '15. The antitrust laws faced the constitutionality question very early on, and their constitutionality has been upheld by the courts despite the fact that antitrust violations are criminal acts for which a civil remedy has been provided. See , e.g. , Chattanooga Foundry & Pipe Works v. Atlanta , 203 U.S. 390, 396-97 (1906).

Conversely, a difference between Tenenbaum's situation and those brought under antitrust provisions is that, in Tenenbaum's case, it is a single, unsophisticated individual facing a monumental monetary judgment rather than a megacorporation malfeasor better situated to withstand such a judgment. Although this difference likely contributed to the RIAA's decision to revise its litigation strategy based on public relations, it does not likely render Tenenbaum's argument that the copyright laws are unconstitutional any more forceful.

The argument that the Act creates a criminal statutory scheme has some weaknesses because the Act protects private, rather than public, rights. The law has long protected private rights from criminal acts by permitting the aggrieved parties to bring civil suits for compensatory damages.

Examples of the dichotomy between criminal and civil actions arising out of the same set of facts are murder (criminal) and wrongful death (civil). When an individual is charged with murder, the potential for criminal penalties in the form of a lengthy incarceration looms large. Because of the enormity of this penalty, it is easy to forget that the potential for civil damages often accompanies such a charge. The law desires to make whole those suffering injury at the hands of others, which is why it permits private parties harmed by criminal acts to bring civil suits.

Congressional Action Possible

Tenenbaum and Nesson's argument that the damages the Act provides for are disproportionately high is unlikely to result in the court finding the act unconstitutional. While Tenenbaum's proposition may have a certain appeal, given the difference in the size and sophistication of the parties on either side of these cases, this appeal is emotional rather than legal. The fact that there is an argument, however, may result in congressional intervention.

Judge Michael Davis, who presided over the Capitol v. Thomas case, articulated a need for congressional action to avoid situations in which individual plaintiffs not acting for profit are required to pay damages hugely out of proportion to the damage they cause. Davis, in his opinion granting a new trial, explained that the damages awarded to plaintiff Capitol Records were likely hundreds of times larger than any monetary harm Jammie Thomas may have caused the recording industry. While Davis acknowledged the need for enhanced damages to deter music piracy, he questioned the need for damages as high as currently called for by the Act, and called for Congress to rethink the statutory scheme.

Excessive Damages?

Certainly, high statutory damages awards might give the court pause, particularly when the alleged copyright infringer is an individual who did not seek to profit from his infringement. Tenenbaum argues that, while statutory damages in copyright cases originally served the legitimate purpose of compensating victims of copyright infringement in cases in which determination of actual damages was difficult, the statutory scheme has led to a departure from this legitimate purpose. Defendant's Opposition to Plaintiffs' Motion to Dismiss Counterclaim at 8-9.

Instead, Tenenbaum argues, the RIAA and its members now attempt to use the statutory damages scheme as a deterrent, which Tenenbaum suggests is improper. Id. For the court to accept this argument would require the adoption of new precedent, however, as Tenenbaum's documents to the court have failed to refer the court to a single case in which statutory damages as deterrent were found to present a constitutional problem.

Tenenbaum has also argued that these high damages rise to the issue of violating the due process clause of the Fourteenth Amendment. Id. at 7. Due process, Tenenbaum argues, forbids damages award that are excessive in relation to the interests violated in a particular case. Tenenbaum has failed to find any support in the case law, however, to support his position that disproportionate damages create a due process problem. BMW v. Gore , 517 U.S. 559 (1996), upon which Tenenbaum heavily relies, stands more for the proposition that a punitive damages award is unconstitutionally excessive when the defendant has no notice of the enormity of potential damages. Tenenbaum's case is different simply because Tenenbaum was presumptively aware of the potential damages for which the act provides, as these damages are specifically enumerated in the Act.

Conclusion

While Tenenbaum's position is contradicted by case law, his stance has caused a change in the RIAA's litigation strategy. The public outcry may also lead to a congressional review of the Act and its damages award. It seems that this awareness has fostered an understanding by the RIAA that aggressive litigation may no longer be the best strategy.

One cannot seriously suggest, however, that the recording industry should abandon all litigation attempts to protect its intellectual property rights. To the extent that its relationships with the ISPs do not cause consumers to cease ongoing infringement, the RIAA is well within its right to sue under the Act and other copyright laws. The creative achievements of musical artists make the recording industry profitable, and it needs to protect its rights to commercialize those achievements.