Less than three weeks after a Massachusetts district court held that the jury award in the Sony v. Tenenbaum filesharing case did not violate the constitution, the Eighth Circuit has come to the same conclusion in Capitol v. Thomas-Rasset.

In a decision yesterday, the federal appeals court upheld the jury award from Thomas-Rasset’s first trial — $222,000 in statutory damages — and “a broadened injunction that forbids Thomas-Rasset to make available sound recordings for distribution.”

The court details the long, winding road this case has travelled, but to sum up: In 2007, a jury awarded damages of $222,000 against Thomas-Rasset for willful infringement of 24 songs on Kazaa. Several months later, the court, on its own, raised the issue of whether it erred when it instructed the jury that “making available” a work online is sufficient to show distribution, or whether evidence of actual distribution to another peer must be shown. After a hearing, the court granted a new trial, this time resulting in a jury verdict of $1,920,000 against Thomas-Rasset. The judge remitted the jury award to $54,000. The record labels rejected the remitted award,1 and a third trial, solely on the amount of damages, was held November 2010. The jury reached a verdict of $1,500,000 against Thomas-Rasset, and this time, the judge subsequently reduced the award to $54,000 on constitutional grounds. Both parties appealed, which is how we got here.

Making Available

The interesting twist here is that the record labels sought to have the first award reinstated, even though it was significantly lower than the most recent verdict. The labels proceeded this way in an attempt to have the Eighth Circuit reverse the district court’s ruling on the “making available” issue.

District courts are divided on whether “making available” counts as distribution, and the issue has generated a good deal of academic attention.2 Ben Sheffner, who covered both the Thomas-Rasset and Tenenbaum trials at his former blog, Copyrights and Campaigns, explains the controversy over the issue:

The problem for plaintiffs is that it is difficult, perhaps impossible, to prove directly that a particular p2p user actually disseminated a particular file to a specific other user. Plaintiffs argue that to prove distribution, it is sufficient to show that the defendant had the files in her “shared” folder, thus making those files available to all other users of the p2p network. There are at least two ways to think about the making available theory: either making the file available in itself counts as distribution, or it is a factual scenario that presents sufficient circumstantial evidence from which a jury can infer that actual dissemination, and thus distribution, occurred.

But while the Eighth Circuit here reinstated the verdict from the first trial, it declined to review the “making available” issue, noting that “this court reviews judgments, not decisions on issues.” The court explained:

That the companies seek these remedies with the objective of securing a ruling on a particular legal issue does not make that legal issue itself the matter in controversy. Once the requested remedies are ordered, the desire of the companies for an opinion on the meaning of the Copyright Act, or for a statement that Thomas-Rasset violated the law by making works available, is not sufficient to maintain an Article III case or controversy.

The Constitution and Statutory Damages

The critical import of this case, as with Tenenbaum, was how to review the damages award. Both parties here disagreed over the proper standard to review the jury award regarding its constitutionality. The lower court, and Thomas-Rasset, argued that the award should be reviewed under the standard developed by the Supreme Court to examine punitive damages, while the record labels, and the United States (acting as intervenor because the constitutionality of a federal statute was at issue), argued that statutory damage awards should be reviewed under the deferential standard from St. Louis v. Williams.3

The court here sided squarely with the record labels:

Due process prohibits excessive punitive damages because “‘[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a State may impose.’” This concern about fair notice does not apply to statutory damages, because those damages are identified and constrained by the authorizing statute. The guideposts themselves, moreover, would be nonsensical if applied to statutory damages. It makes no sense to consider the disparity between “actual harm” and an award of statutory damages when statutory damages are designed precisely for instances where actual harm is difficult or impossible to calculate. Nor could a reviewing court consider the difference between an award of statutory damages and the “civil penalties authorized,” because statutory damages are the civil penalties authorized.

And, applying the Williams standard, the court held that the jury verdict was not unconstitutional.

The Eighth Circuit goes on to say that its conclusion supports the policies of copyright law:

Congress’s protection of copyrights is not a “special private benefit,” but is meant to achieve an important public interest: “to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.”

Statutory damages play a role in advancing this public interest:

Because the damages award “is imposed as a punishment for the violation of a public law, the Legislature may adjust its amount to the public wrong rather than the private injury, just as if it were going to the state.” The protection of copyrights is a vindication of the public interest, and statutory damages are “by definition a substitute for unproven or unprovable actual damages.” For copyright infringement, moreover, statutory damages are “designed to discourage wrongful conduct,” in addition to providing “restitution of profit and reparation for injury.”

The court ends by wrapping up several loose ends, including Thomas-Rasset’s assertion that had the record labels sued for the actual number of files she copied and distributed, the potential damages award would have been astronomical. The court notes it’s a fair point, but hypothetical, and thus not relevant:

If they had sued over 1,000 recordings, then a finder of fact may well have considered the number of recordings and the proportionality of the total award as factors in determining where within the range to assess the statutory damages. If and when a jury returns a multi-million dollar award for noncommercial online copyright infringement, then there will be time enough to consider it.

What’s Next?

This is likely the end of the road for Thomas-Rasset. Though her attorneys have indicated that they will appeal the ruling to the Supreme Court, the odds of the Court granting cert are against them. The Court has already denied an appeal from Tenenbaum, and since this decision is consistent with the Tenenbaum case, there is less of a reason for the Supreme Court to weigh in. So barring the unlikely, it would appear that the record label’s campaign of suing individual filesharers — starting September 2003 and ending December 2008 — has drawn to a close. The RIAA itself, which coordinated the record labels’ lawsuit here, stated that it is looking “forward to putting this case behind us.”

Footnotes

  1. Generally speaking, the Seventh Amendment requires that plaintiffs are given the option of either accepting a remitted award or rejecting it and having a new trial on damages, though there are some who argue that remittitur itself is unconstitutional; see, for example, Suja A. Thomas, Re-Examining the Constitutionality of Remittitur Under the Seventh Amendment, 64 Ohio State Law Journal 731 (2003). []
  2. Compare John Horsfield-Bradbury, “Making Available” as Distribution: File-sharing and the Copyright Act, 22 Harvard Journal of Law & Technology 274 (2008) and Peter S. Menell, In Search of Copyright’s Lost Ark: Interpreting the Right to Distribute in the Internet Age, Journal of the Copyright Society of the USA (2012). []
  3. For more on the different standards, see my previous posts on the subject: Capitol v. Thomas-Rasset Verdict Unconstitutional, Oh Tenenbaum, and Sony BMG v Tenenbaum: District Court Erred in Reducing Jury Verdict. []

9 Comments

  1. As usual, a great analysis of the case and spot on. A lot of food for thought here.

  2. Thanks for the link to the Menell paper in the footnotes. Looking forward to reading it.

  3. I hope she pays every penny or is forced to live in a cardboard box the rest of her life.

  4. What will likely happen? A petition for cert that is denied.

    What should happen? At a minimum, redefine “Publication” in 17 USC 101.

    • I came across this argument a couple weeks ago while researching something else:

      The United States is a signatory country to the 1996 WIPO Copyright Treaty (“Copyright Treaty”), and is therefore bound by its obligations. The Copyright Treaty requires all signatory countries to prohibit the unauthorized “making available to the public” of copyrighted material by means of digital networks. Title I of the DMCA was enacted in 1998 to implement the Copyright Treaty. The treaty was not self-executing, yet the DMCA did not make any modifications to section 106– evidence that Congress may have believed that a making-available right was included in the Copyright Act. Other signatory countries have modified their laws to accommodate a new making-available right. The European Union issued the “Directive on the Harmonization of Certain Aspects of Copyright and Related Rights in the Information Society,” which requires European member countries to provide for a new exclusive right in compliance with the Copyright Treaty.

      Jason J. Lunardi, Guerrilla Video: Potential Copyright Liability for Websites That Index Links to Unauthorized Streaming Content, 19 Fordham Intell. Prop. Media & Ent. L.J. 1077, 1101-02 (2009).

      I’m not sure I agree that if Congress fails to change the law, then it means we can assume the law includes the change that Congress failed to make. Interesting argument though. There is some logic to it considering the treaty obligation.

      • Merely FYI, I would never recommend that Congress amend the definition of “Publication” to now extend its substantive scope to “making available”. I would, however, recommend adding some relatively minor verbiage making it abundantly clear for any court inclined to engage in absurd parsing of words to recognize that “making available” is, and always has been, a substantive rights under under “Publication”, and that any holding to the contrary would immediately be overturned as reversible error.

        IOW, “Dear Judge, “making available” is and always has been actionable, so quit trying to hold otherwise.”

        • IOW, “Dear Judge, “making available” is and always has been actionable, so quit trying to hold otherwise.”

          Ha! Love it! I’m reading the Menell article that Terry linked to in the footnotes. It’s great. Footnote 75 demonstrates that the three major treatises were in agreement that distribution requires actual dissemination:

          See id. at 981 (citing Nimmer on Copyright § 8.11[A], at 8-149 (2007) (“Infringement of [the distribution right] requires an actual dissemination of either copies or phonorecords.”); Patry on Copyright § 13:9, at 13-13 (2007) (“Without actual distribution of copies of the [work], there is no violation of the distribution right.”); Goldstein on Copyright § 7.5.1, at 7:125 to 7:126 (3d ed. 2005) (“[A]n actual transfer must take place; a mere offer for sale will not infringe the right.”)).

          But then in Footnote 90, he explains that he was able to convince Nimmer that this position was in error:

          The discussion that follows is based upon the version of Nimmer on Copyright that was available to jurists and practitioners through August 2011. After reading this article, Professor Nimmer asked me to co-author a complete revision of the sections of Nimmer on Copyright relating to the scope of the distribution right and the definition of “publication.” Consequently, Release 85 of Nimmer on Copyright adopts the analysis of this article. See Nimmer on Copyright §§4.01, 8.11 (forthcoming 2011).

          How cool is that? Looking at the current version of the treatise on Lexis, Nimmer did in fact change his tune:

          [4] “Making Available” or Proof of Actual Dissemination?

          [a] Interpretive Puzzle.

          As will be ventilated below, the key interpretive puzzle over the scope of the distribution right arose in the early twenty-first century, in the context of peer-to-peer “sharing” of music. The nub of the disagreement inhered in whether, to prove violation of its distribution right, the copyright owner needs to show an actual act of distribution of its content, or whether the offer to distribute that content suffices. That precise issue received little explicit attention in the early 1960s, when the distribution right was defined. Nonetheless, the process by which the bill was constructed reveals its intent.

          [b] The 1971 Legislation.

          Of key importance here is the second sentence defining “publication” that was added in 1971: “The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication.” That language signals that Congress intended to trigger “publication” merely by offering of works of authorship to the public—i.e., making them available. In fact, the timing, circumstances, and reasons for adding this language to the definition of publication illuminates Congress’s intent on that issue both with respect to the defined term “publication” and the undefined term “distribution.”

          ***

          These considerations—fully appreciated by the judges, scholars, and litigators of that era—led the drafters of the 1976 Act to introduce into it the term “distribute.” Their intent was to keep the existing right to “publish” intact, but to jettison its innumerable wrinkles in interpretation. For that reason, Congress used the term “distribute” in order to broaden the previous publication right. But its use of that term did not occur in a vacuum. For it simply capitalized on the sentence already added to the Copyright Act in 1971 regarding sound recordings, which was intended to ensure U.S. compliance with a treaty that required owners of sound recordings to be clothed with the exclusive right to control their being offered for distribution to the public.

          In sum, we have the answer to our interpretive puzzle. The distribution right accorded by Section 106(3) is to be interpreted broadly, consonant with the intention expressed by its drafters. It extends to the offer to the general public to make a work available for distribution without permission of the copyright owner. No consummated act of actual distribution need be demonstrated in order to implicate the copyright owner’s distribution right. Later we will test the applicability of that conclusion to the peer-to-peer context.

          2-8 Nimmer on Copyright § 8.11[B][4][a]-[d].

          Now they just cite Nimmer for the proposition. :)