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, 1Generally 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). 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.
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. 2Compare 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). 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. 3For 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.
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.
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.”
|↑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.|