Friday, July 09, 2010

$675,000 verdict reduced to $67,500 in SONY v Tenenbaum

In SONY BMG Music Entertainment v. Tenenbaum, the Court has reduced the jury's award from $675,000, or $22,500 per infringed work, to $67,500, or $2,250 per infringed work, on due process grounds, holding that the jury's award was unconstitutionally excessive.

In a 64-page decision, District Judge Nancy Gertner ruled that:

-to decide the issue on common law remittitur grounds would not have avoided the constitutional question, since plaintiffs had indicated they would not accept a "remitted" award, but would instead proceed to a second trial in the event of remittitur;
-the award of $22,250 per infringed work could not withstand scrutiny under the Due Process Clause and was unconstitutionally excessive;
-$2,250 per infringed work was the maximum amount that the Constitution would permit given the facts of this case;
-the Gore, Campbell, and Williams line of cases was applicable to determining the constitutionality of statutory damages awards
-statutory damages must bear a reasonable relationship to the actual damages
-the actual damages sustained by plaintiffs was no more than $30
-the benefit to the defendant was in the neighborhood of $1500
-it was permissible to treble the minimum statutory damages due to defendant's wilfulness
Decision reducing jury verdict from $675,000 to $67,500

[Ed. note. Since the Court concluded that the actual damages were ~ $1 per work, or $30 total, I don't understand how it arrived at the conclusion that an award of 2250 times that amount passes constitutional muster. -R.B.]

Commentary & discussion:

Slashdot
p2pnet.net
ZeroPaid




Keywords: lawyer digital copyright law online internet law legal download upload peer to peer p2p file sharing filesharing music movies indie independent label freeculture creative commons pop/rock artists riaa independent mp3 cd favorite songs intellectual property portable music player

27 comments:

Justin Olbrantz (Quantam) said...

$2250 = $750 * 3? I guess the logic at work here is that anything above the minimum set by copyright law is unconstitutional, but the amount in the law itself is by definition constitutional?

Ray Beckerman said...

There is no logic to it.

She concluded that the actual damages were $1 [IMHO they're more like 35 cents], and recognized that standard is 2 to 6 times actual damages in even more egregious commercial cases, but then entered an award for 2250 times that amount.

Ross E said...

My question is: Who are on these juries that think its ok to award $675,000 (or $1.92 million) against a person for downloading 30 songs off the internet?

Also, Ray, you're right it makes no sense that the Court can recognize 2-6 times actual damages as being within the constitutional limits in commercial cases, but turn around and award 2250 times actual damages in a non-commercial case. In that regard, why did the Court even bother to make a specific finding regarding actual damages?

Does precedent really establish that the $750 minimum, plus treble damages for willful infringement, is available in non-commercial infringement cases where actual damages are $1? Or is this all first impression?

Ray Beckerman said...

1. The people on these juries were stupid; but I'm guessing that the lawyers & the judge left the jurors thinking they were supposed to award something between $750 & $150,000, and gave them no good instructions explaining what they were supposed to do. In fact the judge should have instructed them that the statutory damages for each work should bear a reasonable relationship to the actual damages sustained by the plaintiff, which is a principle of copyright law, not just constitutional law. In fact, the judge should not have allowed more than $750 per infringed work, period. So it's partly the fault of the lawyering and judging. But no person with a functioning brain would award more than $750.

2. The reason the judge made the finding of actual damages is because she was required to do so; I think she overstated it, though. The real damages is a MAXIMUM of ~35 cents per infringed work (70 cents revenue less 35 cents expenses). Even the 35 cents is excessive, because not every unauthorized download represents a lost sale. Most likely the statistically supported actual damage is 5 or 10 cents.

As to why she then proceeded to enter judgment for 2250 times her overstated figure for actual damages is beyond me.

3. No, precedent does not establish that. Precedent does establish that statutory damages which are from 2 to 6 times the ACTUAL DAMAGES are okay. There is no precedent other than the peculiar ruling in Capitol v. Thomas-Rassett for deciding to ignore the ACTUAL DAMAGES, go to the MINIMUM STATUTORY DAMAGES, and treble that.

What really rankles is that when UMG was a defendant -- and not a plaintiff -- it successfully argued that 10 times actual damages was constitutionally excessive, and got the Court to rule that the award should be reduced to 2 times the actual damages.

Why do large corporations only have to pay 2 times actual damages when they are sued, but are allowed to collect 2250 times actual damages when they are suing?

Why do large corporations get a different and more generous rule applied to them than a kid like Joel Tenenbaum?

I am infuriated.

I hope Tenenbaum's lawyers make a motion for reconsideration on this point alone -- and leave out all their weak arguments.

This is an outrage.

Christopher Gizzi said...

The judge in the Jammie Thomas case ultimately settled on $750*3 per song and it appears as if the judge in this case followed that example. Although I'm sure the RIAA will fight this recent decision - especially since it could set the bar for future infringement considering it was set as the penalty in two cases.

Still, I think $2250 or $750 is a crazy number and still absurd for so many reasons.

M said...

OK, $2250 per work. Now, suppose we are talking about 1 (one) act of distribution committed by 10,000 (ten thousand) defendants "jointly" - will this limit apply to each one of the defendants or to all of them "jointly"? I just wonder...

Alter_Fritz said...

In adition to ray's comments regarding the (missing) logic in the judges math:

What I absolutely not understand is "-the benefit to the defendant was in the neighborhood of $1500"

there were 30 songs he was found guilty of not paying for and for one judge gertner observed logicly sound [not necessary mathematically correct since taxes and stuff do play a role in legimate business transactions, don't they? Or is the MAFIAA's business not a regular one? ;-)] that the copyrightowners(plaintiffs) suffered $1 damages (she probably used the prize that you had to pay for legal single track downloads on itunes.)

So if they lose $1 how can Tenenbaum's "benefit" be "in the neighborhood" of $1500? (30 songs times $50). Even if we asume that a physical CD with the specific 1 track he found guilty to have been infringed cost $50, would it be not only unlogic but also unfair from her to say Tenenbaum "benefitted" for the price of the respective CD when he could have bought the single track for $1 himself?

Have it 2 different ways to calculate the damages for plaintiffs and the benefit for defentant seems totally unlogic and unfair to me.
Is it maybe even an "error of law" by Judge Gertner? Me Hopes the defendant let some higher court check that question!


--
A_F

Alter_Fritz said...

Addendum:

I should have read the whole 64 pages before posting ;-)

Judge Gertner comes to the $1500 benefit figure by arguing that for ~15 bucks a month one can listen to subscription services and that this 15 bucks a month is what forms the basis for the "benefit" calculation (page 48 of the document)

Well, that IS some logic argument, non the less a 2000+ damages award is IMO illogic and my previously articulated hope still stands!

BasicTek said...

Don't these people on the juries realize that they are going to be the next ones on trial getting these outlandish fines for damages that are purely make believe when they backup their DVD, watch a ripped movie a friend lent them, or their kids download something off the internet. It is unfathomable that normal people would come up with something like this if not paid of by the industry.

Isn't someone explaining to them that these are normal people, customers of the music industry, and not some super secret pirating god bent on the destruction of all things copyrighted. It seems like the jury is either a bunch of robots or peiple with really fat bank accounts now.

Ray Beckerman said...

Ross E--

So far there's only one court that's reached the issue of whether $750 is unconstitutionally excessive for download of an mp3 single, and this one court decided that on the facts of the case it was not.

Is this specific question a case of first impression? Yes but as the Judge's discussion shows, there is abundant legal authority on the issue

Ray Beckerman said...

Dear Alter_Fritz

I think the supposed $30 actual damages (actually overstated) & the $1500 benefit could have been used to justify an award in the thousands of dollars but not in the tens of thousands.

The judge should recognize that there is a statute of limitations issue, so the $1500 -- which covered 8 years -- should be sliced to $600.

Had the judge concluded that the constitutionally permissible range for a wilful infringement on these facts topped out at $3780 (i.e. $630 x 6), her decision would have been defensible.

Ray Beckerman said...

Basic Tek wrote:

Don't these people on the juries realize that they are going to be the next ones on trial getting these outlandish fines for damages that are purely make believe when they backup their DVD, watch a ripped movie a friend lent them, or their kids download something off the internet.

Like I said, I think the people on the jury were dumb, but the lawyering & judging helped.

Alter_Fritz said...

@Ray
in response to your "statute of limitations" comment July 10, 2010 1:55:00 PM EDT I have a serious question I would like to be answered:

Judge Gertner used much of the content of her order to point out "what a naughty boy Joel was" i.e. what he had done for so many years.

Yet the plaintiffs sued him for just 30 songs.

Is it in american civil law the norm and/or permissible that defendants gets "punished" [and your copyrightlaw does indeed speak of damages that are punitive, does it not?] for more then what they have done/what the plaintiffs sued the defendant for?

Playing MAFIAA lawyer here (or judge that is overly sympatic to plaintiffs and their overall problem with filesharing as a whole) I mean, this then college "kid" infringed copyrights for years so $65k for maybe thousands and thousands of infringements he commited over the timeframe in question... The sum Judge Gertner now has set is not sooo much money then anymore!

But if her ruling and especially her reasoning should only have the 30 songs in mind...


IIRC in german civil law it is so that a judge, while he is not bound in his decision to the demands that a plaintiff makes, he non the less is not allowed to rule harsher and give a plaintiff more then what that plaintiff demands [sorry, bad english explaination]
you have something comparable in your RCP's?

--
A_F

Ray Beckerman said...

No it would not be part of American law to go outside of the 30 song files in question.

Nor did Judge Gertner. Her award was based on 30 infringed works.

Alter_Fritz said...

"Her award was based on 30 infringed works. "

Well then, it is my humble opinion:
"Diese Entscheidung ist Meschugge" ;-)

And she could have saved a lot of time and pages by refraining from pointing out all the years of infringements when only 30 songs actually "count".


--
A_F

Ray Beckerman said...

In deciding whether a statutory damages award passes constitutional muster, the judge is supposed to take into account all the facts and circumstances that might bear upon the reprehensibility of the defendant's conduct.

I think she came to the conclusion that his conduct was pretty reprehensible, but not at the extreme end of the spectrum, since he wasn't doing it for commercial purposes.

Anonymous said...

Even if she cut it down to the statutory bare minimum of $750 per song, that wouldn't solve the potential abuse. That's still $22,500 - the price of a new car. Anyway, the record companies would simply pile on the songs - it's very little extra trouble to sue for 100 or 500 or 1,000 songs - especially if the courts don't seem to care much about adequate proof of accuracy of the "investigation" and ownership.

Let's hope that Joel presses on...

Anonymous said...

>I don't understand how it arrived at the conclusion that an award of 2250 times that amount passes constitutional muster.

Indeed, every piece of case law she cites and every argument she makes is just as applicable toward $67,500 as it is toward $675,000. Only at the end of her opinion does she fleetingly bring up the Thomas case, Davis's decision and a putative tradition in law that points her to her new number, which she concedes is just as arbitrary.

Anonymous said...

The judge's remarks are very well reasoned, imho, because they seek to reconcile statute, precedent, and the facts at bar. But they are still wrong.

By bringing up the matter of subscriptions services, the decisions attempts to 'have the cake and eat it to.'

The itunes store did not remove DRM until 2009. http://www.pcworld.com/article/162732/drmfree_itunes_what_it_means_for_you.html. This means that the tracks Joel COULD have downloaded form itunes would not have been identical to the ones he got via p2p. He would not have had the same options for the device(s) on which he played them; he might not have had opportunity to make permanent copies; he might have had to keep paying the subscription fee in order to even listen to the tracks on the few devices that would play the tracks (making those purchases more akin to leases with a one-time lease fee); and there might have been tracks he wanted that were not available through paid services. In short, comparing download to subscription, even unlimited download subscription, is comparing apples and oranges.

Second, unless I'm utterly mistaken (a fact which I will gladly concede) I believe there was some mention that part of his defense went something to the effect that at the time, the paid services were not a valid option, for one or more of the reasons stated above, which seems to give the lie to the argument that Joel would be willing to use paid services. All of the above said, unless I'm wrong - and someone please correct me on this, because I think I am - the judge either had evidence contrary to, or no evidence in favor of, the assumptions laid out in the ruling, and so was barred (by judicial ethics, by the canons of law, by the rules of jurisprudence - something) from assuming Joel would subscribe. That effectively moots the whole affair as well.

Finally, I believe some mention was made of a redacted letter sent by Joel to the record companies offering to settle. That they refused his offer to settle made them look bad, imo, it being evidence of bad faith. That they went on to not only introduce that offer at trial, but to redact the letter is (again, imo) just flat reprehensible. Isn't there some remedy over just these items alone?

--Quiet Lurker

DTS said...

I believe when the Capitol vs. Thomas-Rasset case came into its first conclusion Wired carried a couple of reports, where a few members of the jury were interviewed. They professed to having no technological experience and insisted on punishing Jammie as hard as they saw fit. So, BasicTek, I'd have to suggest the former, but I find it's not hard to expect such behaviour from people who rely on mainstream media. Even now newspapers here say Jammie was found guilty for downloading music, which as I recall weren't the exact charges brought.

Anonymous said...

Judge Gertner found the actual damages sustained by plaintiffs was no more than $30 and the unduly large amount of damages that plaintiffs are seeking would seem to lead a reasonable person to assume that the plaintiffs are only in this for the scare tactics.

I'm just wondering when a judge, any judge, will wake up and demand that the plaintiffs actually show how they came up with this number.

-Me

Justin Olbrantz (Quantam) said...

"I'm just wondering when a judge, any judge, will wake up and demand that the plaintiffs actually show how they came up with this number."

The RIAA didn't ask for specific damages. They simply asked for the statutory damages defined by law. These statutory damages were defined back in the day of printers, when copyright infringement was usually done with expensive machinery that limited it to large operations. It's now being applied to individuals, which was never the intention of those dollar figures.

Originally in the US statutory damages were per-copy, as opposed to per-work. That was changed because that was producing statutory damage awards that were too high for people making large numbers of copies of a small number of works. In other words, the purpose of the change was to LOWER statutory damages.

And today's captcha: sucker.

Justin Olbrantz (Quantam) said...

Something I should have added to the last post: I get the feeling that the judges in this case and the recent Thomas case believe that these damages are unconstitutionally high, but feel unable or unwilling to pick a fight with congress over the statutory damages defined by law.

Ray Beckerman said...

You mean they were chicken?

Anonymous said...

Thank you Justin/Ray for clarifying what I was implying.

-Me

Ray Beckerman said...

:)

M. Yass said...

So glad I live in a civilized country (Canada) where this kind of asinine litigation is not permitted. And yes, I download and share with impunity.