Stories of heroic legal battles, typically involving underdogs fighting against all odds for truth and justice, are popular fodder for books and films.

Gideon’s Trumpet tells the tale of a poor, uneducated man, in and out of jail most of his life, who doggedly pushes his latest conviction all the way to the Supreme Court and wins — in turn, setting the precedent that the Constitutional right to an attorney applies in State courts.

The Buffalo Creek Disaster recounts the aftermath of a devastating coal mining disaster that wiped out a West Virginia town and the efforts of a group of attorneys to hold the mining company responsible for failing to prevent the bursting of the dam.

The film Erin Brockovich portrays the tale of a single mother without a formal legal education who launched a successful fight against a large utility company alleged to be contaminating groundwater and sickening the local population, leading to the largest settlement paid in a direct action lawsuit in US history. 1According to Wikipedia.

Perhaps Joel Tenenbaum and his legal team are hoping one day to have their legal battle memoralized in a similar story. Regarding Tenenbaum’s appeal of the $675,000 — $22,500 per song for 30 songs — awarded as damages for copyright infringement, one of the law students working on the case expressed “real hope for Joel, for justice, and for rationality.”

Justice, it seems, must save college students from the tyranny of having to pay 99 cents to own a song.

Don’t get me wrong, $675,000 is a lot of money, and Tenenbaum was one of the unlucky quarter of 1/10 of one percent of illegal filesharers to be sued by the record labels between 2003 and 2008, 2This is a back-of-the-envelope calculation, derived from InternetWorldStats number of US internet users in 2005, Interpret’s percentage of internet users who have downloaded illegally, and record label court filings indicating the number of named defendants contacted during the litigation campaign. and of those, one of only 2 out of 18,000 defendants to have gotten a jury award of statutory damages against him.

But is $675,000 an unconstitutional amount to be awarded against an individual who has engaged in P2P infringement? That is the question currently facing the First Circuit.

On July 9, 2010, Judge Gertner reduced the jury’s award of $675,000 to $67,500 on constitutional grounds in Sony BMG Music Entertainment v. Tenenbaum. 3721 F.Supp.2d 85 (D. Mass). This is in contrast to the reduction of the jury award in the Jammie Thomas case, which was made under the common law procedure of remittitur 4Capitol Records v. Thomas-Rasset, 680 F.Supp.2d 1045 (D. Minn 2010). — and, in fact, Judge Gertner relied in part on the fact that the plaintiffs in Thomas-Rasset had rejected the remitted award to support her conclusion that the constitutional question in Tenenbaum could not be avoided. 5As Gertner observed, it is a generally accepted principle that courts should “avoid confronting constitutional questions when they can reasonably rest their holdings on other grounds.”

Both parties appealed the decision to the First Circuit, joined by the United States as plaintiff-intervenor. You can read the appellate briefs here.

Oral arguments were held April 4, you can listen to them here:

[wpaudio url=”http://www.ca1.uscourts.gov/files/audio/10-1883.mp3″ text=”Oral arguments – Sony BMG Music Entertainment v. Tenenbaum” dl=”0″]

Several bloggers attended the oral arguments in person and have written up their accounts: these include Joel Sage at Legally Sociable and Steven Ayr at AyrLaw.

Background

There is a wealth of information online that explores the issues involved in this appeal.

Just yesterday, the NYU IP and Entertainment Law Ledger published What are the Constitutional Limits on Awards of Statutory Damages? by Andrew Berger, which examines the Tenenbaum appeal and its legal issues in depth.

First up is an excellent debate between Ben Sheffner and Pamela Samuelson about whether statutory damages in P2P cases are unconstitutionally large at PENNumbra.

Also from Sheffner, check out Due Process Limits on Statutory Civil Damages? Unprecedented Ruling in Copyright Case a Double-edged Sword for Businesses, published by the Washington Legal Foundation.

The Intellectual Property Colloquium has a podcast available on the same subject. UCLA professor Doug Lichtman hosts the thorough examination of many of the issues raised in Tenenbaum’s case with guests that include Tenenbaum’s attorney Charles Nesson, general counsel for the RIAA Steven Marks, and several academic experts on punitive damages.

The Progress & Freedom Foundation hosts The ‘Lessigation’ of Copyright Scholarship: A Review of Statutory Damages in Copyright Law: A Remedy in Need of Reform, which provides an overview of the history and purpose of copyright’s statutory damages.

Finally, Copygrounds has a post written by Matthew Oppenheim explaining the role of statutory damages in P2P cases from the record labels’ perspective that’s worth a read.

Issues at Stake

The key issue in the Tenenbaum appeal is whether the Due Process Clause of the Constitution can limit the amount of damages awarded by a jury under copyright’s statutory damages provision — and if it can, how is that determined?

The lower court noted that due process “prevents the awarding of damages without adequate procedural protections, but it also seeks to define the outer limits of what excessive punishment is,” noting also that it has both a procedural and a substantive component.

Judge Gertner concluded that the damages were unconstitutional using the analysis from BMW of North America v. Gore. 6517 US 559 (1996). There, the Supreme Court set out three guideposts for determining whether an award of punitive damages runs afoul of the Due Process Clause: (1) “the degree of reprehensibility of” the defendant’s acts, (2) “the disparity between the harm or potential harm suffered by [the plaintiff and the] punitive damages award”, and (3) “the difference between this remedy and the civil penalties authorized or imposed in comparable cases.”

The record labels and government disagree with Gertner’s choice of standard. They argue that the damages should be analyzed under the more deferential standard of St. Louis v. Williams 7251 US 63 (1919). because, unlike the punitive damages involved in Gore, statutory damages are set by law. The Court in Williams was tasked with determining whether a penalty set by statute violated the Due Process Clause. It concluded that governments “possess a wide latitude of discretion” in setting statutory penalties, and the limitations of the Due Process Clause only come into play when a penalty is “so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.”

Due process certainly plays a role in punitive damages awards. Since the amount of such an award is not set by law, potential defendant’s have no notice of the amount of liability they may face in the course of their business, the amounts awarded by different juries for similar cases may vary so greatly as to be unfair, and juries may award damages that are simply unreasonable in light of the harm caused.

These due process concerns are attenuated when the amount of damages, even a range of damages available as in copyright infringement, is set by Congress rather than left to the discretion of a jury. Potential defendants have a sense of what their maximum liability can be — and given the FBI warnings on every DVD, it’s fair to say that statutory damages for copyright are one of the most well-known federal statutes concerning damages. The range of damages may be broad, but they are confined. And Congress presumably considers the reasonableness of the damages in light of the range of behaviors that would trigger an award.

The record labels, along with Sheffner and Berger, point out that the Gore guideposts are inapt for testing the constitutionality of statutory damages for these reasons.

What’s more, the issue of whether the award is unreasonable or unfair has to be viewed in light of the fact that it is roughly half the average of every jury award of statutory damages in P2P infringement cases that reached a jury verdict. 8Tenenbaum’s liability of $675,000 for 30 songs comes out to $22,500/song. The award in Jammie Thomas’s first civil trial was $9,250/song, in her second $80,000/song, and in the third trial, which concerned the amount of damages only, the jury awarded $62,500/song. All four juries that considered these cases, seeing the evidence with their own eyes and hearing the testimony for themselves, and weighing the amount of damages to award in light of the circumstances, have found it appropriate to hold P2P infringers liable for an average of $43,662.50 a song. The argument is essentially that each and every jury has acted unreasonably and unfairly.

Of course, both sides argue that it doesn’t matter which standard is applied. According to the record labels, the damages award is constitutional under both Gore and Williams; Tenenbaum argues it is unconstitutional under either.

If the First Circuit reaches the Due Process issue, much of the conclusion may rest on what measure of the harm caused by Tenenbaum is accepted. Were his actions, as Judge Gertner held, similar to the theft of a small number of individual songs? In that case, the harm would be relatively small — $21 by Gertner’s calculations. Or are his actions more like those of an unrestricted licensee of the songs at issue — meaning the potential harm caused approaches the entire value of the copyrighted work.

It’s also likely that the court will have to take a look at whether or not Congress intended for the statutory damages provision to apply to the type of conduct Tenenbaum engaged in, though even here, both sides disagree over how to characterize his conduct. Is it simply personal, noncommercial copying, or is it “easy and ubiquitous” infringement that harms copyright holders on a scale beyond even large-scale commercial physical piracy? Whichever view the court takes will play a role in determining the reasonableness of the damages award.

A Broad Attack on Statutory Damages

All the parties raise other issues besides Due Process in their appellate briefs. Most notably, Tenenbaum raises two issues attacking the very validity of copyright’s statutory damage provision.

Tenenbaum first argues that statutory damages were “never intended for consumer copying,” relying primarily on legislative history to reach this conclusion. Commenting at Legally Sociable, one of the members of Tenenbaum’s legal team expressed dismay that First Circuit Chief Judge Lynch expressed “hostility” toward this point during oral arguments and intends to “elevate textualism over Congressional intent and rationality.”

But, with all due respect to Tenenbaum’s legal team, this seems to conflate textualism, a theory of statutory interpretation, with textual rules of statutory construction — specifically, the plain meaning rule.

Statutory interpretation, under any theory, is used by courts when the plain meaning of a statute can’t be determined. Perhaps a term or phrase is ambiguous, or perhaps the language of the statute can be taken more than one way. In these situations, courts need to look at other things to determine what the law means, like the intent of its drafters or the underlying goals of the statute.

But if the meaning of the statute is plain on its face, there is typically no need for further interpretation. 9US v. Ron Pair Enterprises, 489 US 235 (1989). Presumably, Congress intended the law to mean what it wrote it to say.

And I think the language of the statutory damage provision of the Copyright Act is quite clear. Statutory damages apply to any “infringer of copyright.” 1017 USC § 504(a). An “infringer of copyright” is “anyone who violates any of the exclusive rights of the copyright owner.” (Emphasis added). 1117 USC § 501(a). In contrast, other provisions expressly take commercial use into consideration: for example, fair use (“In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes”) 1217 USC § 107. and criminal copyright infringement (“Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed—(A) for purposes of commercial advantage or private financial gain”). 1317 USC § 506(a). There’s simply nothing in the language of the Copyright Act that supports a commercial/noncommercial distinction for awards of statutory damages.

Tenenbaum’s second argument asserts that the Supreme Court declared the current statutory damages provision unconstitutional in Feltner v. Columbia Pictures Television. 14523 US 340 (1998). It’s a creative argument, and one Feltner himself made after his case was remanded from the Supreme Court. 15Columbia Pictures v. Krypton Broadcasting, 259 F.3d 1186, 1192-93 (9th Cir. 2001). The 9th Circuit rejected this argument as unpersuasive, a position “contrary to the express language of the Supreme Court’s decision” and one based on a failed understanding of the holding in that case. Nevertheless, Tenenbaum hopes to convince the First Circuit that the 9th Circuit was mistaken.

Implications

It’s unclear what effect an affirmance by the First Circuit would have on P2P litigation specifically. The record labels are no longer pursuing lawsuits against individual infringers; only one other case has reached the jury stage. And while other copyright holders have notably tried the strategy of suing end-users in the past year, I have doubts that this is an effective strategy from a financial standpoint. Individual copyright holders don’t have the resources that an industry group has to sustain mass lawsuits through the trial stage, these lawsuits are already facing procedural setbacks, and at the end of the day, judgments, whether thousands of dollars or hundreds of thousands of dollars, are difficult to collect — especially from individuals. They just don’t have the money. In other words, litigation of end users as a “business model” is, I think, unlikely to be sustainable no matter if there are limitations on statutory damages or not.

But the effect of an affirmance will have an effect on lawsuits outside this specific arena, and that effect will be felt most by smaller copyright holders. Andrew Berger writes:

Affirming the result in Tenenbaum will negatively impact copyright enforcement for years to come for a number of reasons.

First, affirmance will cause many meritorious copyright claims never to be litigated. That is because Tenenbaum, contrary to the Copyright Act, requires copyright owners to prove actual damage as a pre-condition to recovering statutory damages. But many copyright holders will be unable to show actual damages. The value of a copyright, especially at inception, is often impossible to estimate. How much is an unpublished novel by a first-time author worth?

Second, removing the teeth from the statutory damage scheme, which is what Judge Gertner essentially did, relegates litigants to actual damages. But they are often inadequate for a number of reasons. First, actual damages may be less than the cost of detecting, investigation and, for sure, litigating. So why bother? Second, actual damages, often requiring extensive accounting analysis, may be prohibitively expensive to prove. Third, although actual damages in copyright litigation include the infringer’s profits attributable to the infringement, there may be none to collect either because an infringer earned none, conveniently lost its sales records or never kept any.

 

References   [ + ]

1. According to Wikipedia.
2. This is a back-of-the-envelope calculation, derived from InternetWorldStats number of US internet users in 2005, Interpret’s percentage of internet users who have downloaded illegally, and record label court filings indicating the number of named defendants contacted during the litigation campaign.
3. 721 F.Supp.2d 85 (D. Mass).
4. Capitol Records v. Thomas-Rasset, 680 F.Supp.2d 1045 (D. Minn 2010).
5. As Gertner observed, it is a generally accepted principle that courts should “avoid confronting constitutional questions when they can reasonably rest their holdings on other grounds.”
6. 517 US 559 (1996).
7. 251 US 63 (1919).
8. Tenenbaum’s liability of $675,000 for 30 songs comes out to $22,500/song. The award in Jammie Thomas’s first civil trial was $9,250/song, in her second $80,000/song, and in the third trial, which concerned the amount of damages only, the jury awarded $62,500/song.
9. US v. Ron Pair Enterprises, 489 US 235 (1989).
10. 17 USC § 504(a).
11. 17 USC § 501(a).
12. 17 USC § 107.
13. 17 USC § 506(a).
14. 523 US 340 (1998).
15. Columbia Pictures v. Krypton Broadcasting, 259 F.3d 1186, 1192-93 (9th Cir. 2001).

15 Comments

  1. I’m very surprised you didn’t listen to the words of Whitney Harper as well, nor comment on them:

    link

    • Harper’s case presented a different issue than Tenenbaum’s.

      • Harper’s case involved her attempted use of the “innocent infringer” defense, which ultimately failed before the appellate court and the Supreme Court (cert. denied).

        Tenenbaum’s case could not be more different. He admitted infringement, both downloading and uploading. He admitted wilfullness. He admitted having engaged in his actions over a course of many years, with his activities embracing far, far, far more than just the few works selected by the plaintiffs for purposes of filing their lawsuit. During the course of the trial he continued to engage in activities directly contrary to the orders of the court.

        Yes, his case could not be more different.

        • I was more concerned with what she has actually said as a result of the litigation against her. Her case is similar from the statutory damages claim that gives her a $30,000 lien against her name for infringement.

          I’m glad to see people begin to realize that the litigation issue seems to be coming to an end in copyright, no matter how that comes to be.

          Bear in mind, the statutory damages and the jury issue do need to be resolved in some capacity. We have had quite a number of years of filesharing. There’s plenty of evidence to say that artists have not been harmed by the unbundling of CDs. There’s no justifiable reason to try to sue someone for half a million dollars when they didn’t have it in the first place.

          Although Tenenbaum had a chaotic defense, it is quite dubious to say ” The argument is essentially that each and every jury has acted unreasonably and unfairly,” if the instructions merely tell the jurors to pick a number between $750 and $22,750.

          With the statutory damages set by Congress, the incentive to criminalize filesharing has increased tremendously. 2008 was the year of the RIAA suing the world. Obviously, there’s much better ways to make the world go round than the cases of Tenenbaum, Thomas, and Harper.

          • To clarify a few points:

            “The argument is essentially that each and every jury has acted unreasonably and unfairly,” if the instructions merely tell the jurors to pick a number between $750 and $22,750 [per infringement].”

            “With the statutory damages set by Congress, the incentive to criminalize filesharing has increased tremendously. 2008 was the year of the RIAA suing the world. [They tried to sue people for infringements until the courts used the same defenses that the mass infringement cases are hinged on. Obviously, there’s much better ways to make the world go round than the [strong arm of copyright being used against alleged infringers. Using the litigation side of copyright for] cases [such as] Tenenbaum, Thomas, and Harper,[ aren’t going to make people spend money for music. There need to be better ways than court cases to show the way.]

      • To Jay’s post of 4/24/2011 at 10:06 PM:

        I am aware of no movement within Congress to extend the criminal provisions specified in Title 17. They are tightly constrained in scope, and none of the various proposals within Congress over the past several years have suggested an extension of what comprises criminal activity under Title 17.

        Quite frankly, I am much more concerned with the possibility that Congress and the states might make a move to rely upon their inherent power to tax against P2P transfers, much like what several states are attempting to do with respect to sales using the internet.

        This site purports to examine the economic impact of federal and state legislation. It seems to me that activities such as “inactivity” and file transfers would be an interesting subject to examine and present in an article here.

        • The last paragraph was included by mistake. It was meant to be included in a post on an entirely different site. My apologies to Mr. Hart.

        • Is there not at least two copyright bills that seem to be effectively going in the wrong direction? Namely COICA seems to be targeted at “rogue sites” by making the AG more prevalent.

          Then there is the fashion copyright bill that is ill advised to become law. What’s truly egregious is the very fact that the main supporter of the bill, “infringed” on a minor competitor.

          For the former, I have yet to see Rep. Issa or Leahy have any proof that these are needed. They say they want to fight piracy, but a look at who is supporting them tells a very different story.

          Regarding the latter, Johanna Blakely does well in discussing the limits of copyright in fashion

          • As Mr. S correctly pointed out, the proposed COICA wouldn’t extend what comprises criminal infringement under Title 17 — it adds duties for third-party service providers engaged in business with websites already subject to forfeiture proceedings for existing violations of the criminal provisions of the Copyright Act.

            The Innovative Design Protection and Piracy Prevention Act only provides for civil, not criminal, enforcement. (And though the protection under the Act shares some similarities with copyright law and would be found in Title 17, it is not an amendment to the Copyright Act.)

  2. You really shouldn’t link to that PFF piece, you are above the dishonest, low-blow tactics of Tom Sydnor. I read and respect your views though I differ in opinion about 50% of the time, linking to hacks like him makes me question your motives. The Sydnors of the world do nothing to advance rational debate, only drag it down to hysteria and half-truths.

    • That’s fine if you don’t agree with me all the time and I respect that, but those are the words of Whitney Harper. I have no idea who Tom Snyder is.

      • Jay – That comment was directed toward Terry, not you. I have no problem with you linking to something Whitney Harper said, but I do have an issue with Terry linking to the now defunct Progress and Freedom Foundation’s attack-dog (Tom Sydnor).

        Sorry for the confusion.

        • I apologize as well. I had thought your comment was a direct reply to mine, which seemed to confuse me. Reading, I did come across the PFF link and was a little confused.

  3. I liked your footnote to Erin Brokovitch.

  4. Mr. Hart,

    It seems that issue has been taken concerning the link to the PFF. In so doing the “message” is being deprecated solely on the basis of the person who presented the “message”.

    I am quite pleased that you have chosen to ignore the “message/messenger” distinction.

    The arguments before the appeals court were quite interesting, including the “argument” by a representative of the EFF.

    Frankly, as appeals arguments go the only ones that addressed the issues ON APPEAL were those presented by the USG and the Plaintiffs/Respondents. I must admit confusion regarding the argument on Mr. Tenenbaum’s behalf that the jury instruction should have mentioned only a “floor”, and not a “ceiling”. The same can be said of the “commercial/non-commercial” distinction since the statute draws no such distinction. In all candor, I have always considered the fundamental issues at stake here being: (1) The role of the jury vis a vis that of the presiding judge, and (2) the deferrence to be extended by the judiciary to Congress in the balance it has chosen to strike.

    I have concerns regarding some of the substantive provisions contained within Title 17, but I have much graver concerns relating to (1) and (2) above.