Eighth Circuit Ends Thomas-Rasset File-Sharing Fight

“We are pleased with the appellate court's decision and look forward to putting this case behind us,” stated Cara Duckworth, a spokeswoman for the Recording Industry Association of America (RIAA) in an e-mailed statement. The RIAA is commenting on behalf of the attorneys in the case. Paul Clement of Bancroft argued for the record companies at the Eighth Circuit. Other lawyers on the case were from Bryan Cave, Washington's Oppenheim + Zebrak and the RIAA. Barnes & Thornburg was local counsel.

Jammie Thomas-Rasset's lawyer, Kiwi Camara of Houston-based Camara & Sibley, did not respond to a request for comment, but has been quoted in other press reports as saying he would likely appeal the case to the U.S. Supreme Court. See, “Appeals Court Raises Damages Award in Music Piracy Case,” Rueters.com, http://reut.rs/OoeRS5.

A year ago, the First Circuit reinstated a $675,000 damages award against Boston University graduate student Joel Tenenbaum for illegal music downloading in a similar case. In May, the Supreme Court declined to grant certiorari in that case. In August, District of Massachusetts judge Rya Zobel affirmed the award, citing “the deference afforded Congress' statutory award determination.” See, Sony BMG Music Entertainment, et al. v. Joel Tenenbaum, No. 07-11446-RWZ (D. Mass., Aug. 23, 2012) (http://1.usa.gov/S7LSNp).

In 2005, Capitol, Sony BMG Music Entertainment, Arista Records, Interscope Records, Warner Bros. Records and UMG Recordings Inc. started investigating suspected infringement of copyrights through illegal Internet distribution. They brought thousands of cases, most of which settled.

Thomas-Rasset Background

The companies sued Thomas-Rasset in 2006, seeking statutory damages and injunctive relief for willful copyright infringement under the Copyright Act.

The first jury to hear the case issued a $222,000 verdict against Thomas-Rasset in 2007, but the judge ordered a new trial due to a jury instruction error. The second jury awarded $1.92 million in damages, or $80,000 per work, in 2009. The judge cut that verdict to $54,000, or $2,250 per work, but the record labels refused to accept that amount. The third jury awarded the companies $1.5 million in damages, or $62,500 per work, against Thomas-Rasset in 2010. The judge again reduced the award to $54,000. Under the Copyright Act, statutory damages for willful copyright infringement range from $750 to $150,000 per infringed work.

The recording companies appealed. According to the Eighth Circuit, they sought the smaller award issued by the first jury “because they wanted a ruling on the legal issue whether making works available is part of the distribution right protected by the Copyright Act.”

Judge Steven M. Colloton issued the Eighth Circuit opinion, joined by judges Michael Melloy and Diana Murphy.

On the damages issues, Colloton wrote that Congress exercised its discretion in setting a wide range of statutory damages for copyright infringement and this award is near the lower end of the range: “With the rapid advancement of technology, copyright infringement through online file-sharing has become a serious problem in the recording industry. Evidence at trial showed that revenues across the industry decreased by [50%] between 1999 and 2006, a decline that the record companies attributed to piracy. This decline in revenue caused a corresponding drop in industry jobs and a reduction in the number of artists represented and albums released.” Colloton observed that “Congress no doubt was aware of the serious problem posed by online copyright infringement” when it last reviewed he Copyright Act in 1999.

Colloton took apart the lower court's holding that any award higher than $2,250 per work would violate the Constitution because it imposed a treble damages limit on the $750 minimum statutory damages award: “The limits of treble damages to which the district court referred, such as in the antitrust laws or other intellectual property laws, represent congressional judgments about the appropriate maximum in a given context. They do not establish a constitutional rule that can be substituted for a different congressional judgment in the area of copyright infringement.”

Colloton went on to describe Thomas-Rasset's action as “an aggravated case of willful infringement” without a profit motive: “If an award near the bottom of the statutory range is unconstitutional as applied to her infringement of [24] works, then it would be the rare case of noncommercial infringement to which the statute could be applied.”

On the injunction issue, Colloton agreed with the recording companies' argument that once Thomas-Rasset made copyrighted works available, she completed all of the steps necessary for her to engage in the same distribution the court enjoined. He also wrote that the district court's narrower injunction could be difficult to enforce because of the practical difficulties of detecting the transfer of recordings to third parties: “An injunction against making recordings available was lawful and appropriate under the circumstances, even accepting the district court's interpretation of the Copyright Act.”

The Eighth Circuit declined to rule on the issue of whether the Copyright Act protects a right to “making available” sound recordings. Colloton wrote: “Important though the 'making available' legal issue may be to the recording companies, they are not entitled to an opinion on an issue of law that is unnecessary for the remedies sought or to a freestanding decision on whether Thomas-Rasset violated the law by making recordings available.”

The court vacated the district court's judgment and remanded the case.

The Justice Department, which was an intervenor in the case, has no comment, said spokesman Charles Miller.

Aaron Moss, an intellectual property partner at Greenberg Glusker Fields Claman & Machtinger in Los Angeles who wasn't involved in the First or Eighth Circuit cases, said each of them involved activist judges who were shocked by the degree to which individual defendants were being punished for noncommercial infringement.

“Now, based on the First Circuit ruling and today's ruling, there's a clear indication that when Congress passes a statutory damages regime, ' it is almost by definition going to be constitutional.”

[Editor's Note: Internet Law & Strategy has been following the saga of Jammie Thomas-Rasset since she was found guilty in October 2007 of violating copyright law by downloading music after being sued by the RIAA and ordered to pay $222,000. (See, "RIAA Wins File-Sharing Suit," http://bit.ly/OeXSlD.) After almost five years of legal battles, Thomas-Rasset seems to have finally run out of courts to plead her case, as this report from The National Law Journal details.]

The U.S. Court of Appeals for the Eighth Circuit has reinstated statutory damages of more than $220,000 against a woman who illegally file-shared two dozen songs, finding the damages to be constitutional.

On Sept. 11, 2012, a unanimous panel held that Jammie Thomas-Rasset must pay $222,000 in damages, or $9,250 per work, to several recording companies. That was the amount they were awarded in October 2007 after the first of three trials in the case, Capitol Records v. Thomas-Rasset. The appeals court also held that Chief Judge Michael Davis of the District of Minnesota erred by ruling in July 2011 that the due process clause allowed statutory damages of only $54,000. That ruling followed the third trial.

“We are pleased with the appellate court's decision and look forward to putting this case behind us,” stated Cara Duckworth, a spokeswoman for the Recording Industry Association of America (RIAA) in an e-mailed statement. The RIAA is commenting on behalf of the attorneys in the case. Paul Clement of Bancroft argued for the record companies at the Eighth Circuit. Other lawyers on the case were from Bryan Cave, Washington's Oppenheim + Zebrak and the RIAA. Barnes & Thornburg was local counsel.

Jammie Thomas-Rasset's lawyer, Kiwi Camara of Houston-based Camara & Sibley, did not respond to a request for comment, but has been quoted in other press reports as saying he would likely appeal the case to the U.S. Supreme Court. See, “Appeals Court Raises Damages Award in Music Piracy Case,” Rueters.com, http://reut.rs/OoeRS5.

A year ago, the First Circuit reinstated a $675,000 damages award against Boston University graduate student Joel Tenenbaum for illegal music downloading in a similar case. In May, the Supreme Court declined to grant certiorari in that case. In August, District of Massachusetts judge Rya Zobel affirmed the award, citing “the deference afforded Congress' statutory award determination.” See, Sony BMG Music Entertainment, et al. v. Joel Tenenbaum, No. 07-11446-RWZ (D. Mass., Aug. 23, 2012) (http://1.usa.gov/S7LSNp).

In 2005, Capitol, Sony BMG Music Entertainment, Arista Records, Interscope Records, Warner Bros. Records and UMG Recordings Inc. started investigating suspected infringement of copyrights through illegal Internet distribution. They brought thousands of cases, most of which settled.

Thomas-Rasset Background

The companies sued Thomas-Rasset in 2006, seeking statutory damages and injunctive relief for willful copyright infringement under the Copyright Act.

The first jury to hear the case issued a $222,000 verdict against Thomas-Rasset in 2007, but the judge ordered a new trial due to a jury instruction error. The second jury awarded $1.92 million in damages, or $80,000 per work, in 2009. The judge cut that verdict to $54,000, or $2,250 per work, but the record labels refused to accept that amount. The third jury awarded the companies $1.5 million in damages, or $62,500 per work, against Thomas-Rasset in 2010. The judge again reduced the award to $54,000. Under the Copyright Act, statutory damages for willful copyright infringement range from $750 to $150,000 per infringed work.

The recording companies appealed. According to the Eighth Circuit, they sought the smaller award issued by the first jury “because they wanted a ruling on the legal issue whether making works available is part of the distribution right protected by the Copyright Act.”

Judge Steven M. Colloton issued the Eighth Circuit opinion, joined by judges Michael Melloy and Diana Murphy.

On the damages issues, Colloton wrote that Congress exercised its discretion in setting a wide range of statutory damages for copyright infringement and this award is near the lower end of the range: “With the rapid advancement of technology, copyright infringement through online file-sharing has become a serious problem in the recording industry. Evidence at trial showed that revenues across the industry decreased by [50%] between 1999 and 2006, a decline that the record companies attributed to piracy. This decline in revenue caused a corresponding drop in industry jobs and a reduction in the number of artists represented and albums released.” Colloton observed that “Congress no doubt was aware of the serious problem posed by online copyright infringement” when it last reviewed he Copyright Act in 1999.

Colloton took apart the lower court's holding that any award higher than $2,250 per work would violate the Constitution because it imposed a treble damages limit on the $750 minimum statutory damages award: “The limits of treble damages to which the district court referred, such as in the antitrust laws or other intellectual property laws, represent congressional judgments about the appropriate maximum in a given context. They do not establish a constitutional rule that can be substituted for a different congressional judgment in the area of copyright infringement.”

Colloton went on to describe Thomas-Rasset's action as “an aggravated case of willful infringement” without a profit motive: “If an award near the bottom of the statutory range is unconstitutional as applied to her infringement of [24] works, then it would be the rare case of noncommercial infringement to which the statute could be applied.”

On the injunction issue, Colloton agreed with the recording companies' argument that once Thomas-Rasset made copyrighted works available, she completed all of the steps necessary for her to engage in the same distribution the court enjoined. He also wrote that the district court's narrower injunction could be difficult to enforce because of the practical difficulties of detecting the transfer of recordings to third parties: “An injunction against making recordings available was lawful and appropriate under the circumstances, even accepting the district court's interpretation of the Copyright Act.”

The Eighth Circuit declined to rule on the issue of whether the Copyright Act protects a right to “making available” sound recordings. Colloton wrote: “Important though the 'making available' legal issue may be to the recording companies, they are not entitled to an opinion on an issue of law that is unnecessary for the remedies sought or to a freestanding decision on whether Thomas-Rasset violated the law by making recordings available.”

The court vacated the district court's judgment and remanded the case.

The Justice Department, which was an intervenor in the case, has no comment, said spokesman Charles Miller.

Aaron Moss, an intellectual property partner at Greenberg Glusker Fields Claman & Machtinger in Los Angeles who wasn't involved in the First or Eighth Circuit cases, said each of them involved activist judges who were shocked by the degree to which individual defendants were being punished for noncommercial infringement.

“Now, based on the First Circuit ruling and today's ruling, there's a clear indication that when Congress passes a statutory damages regime, ' it is almost by definition going to be constitutional.”