Obama Administration: $1.5 Million For Sharing 24 Songs Is Perfectly Reasonable

from the out-of-touch dept

In the latest round of the fight over how much Jammie Thomas-Rasset should pay for sharing 24 songs online, we have the federal government weighing in to say that $1.5 million for those 24 songs is perfectly reasonable and Constitutional. Must help that the White House Solicitor General was previously a litigator for the RIAA in the case, huh (though, he did not write the filing)?

If you don't recall, there are statutory rates for copyright infringement, which are ridiculously high, and it seems reasonable to question if those awards, which seem totally disproportionate to any "damages," could be seen as excessive under the Constitution.

The district court judge, Michael Davis, clearly felt so. Ditto Judge Nancy Gertner in the Joel Tenenbaum case. However, the government apparently is going to argue that the statutory rate is the statutory rate and we must respect that. The argument is basically the same behind the implementation for statutory rates in the first place. To paraphrase: "man, it's freaking hard to have to show actual damages (since there might not be any) and thus we shouldn't have to do that -- but should just be able to use these crazy high numbers." This argument seems silly frankly. It's basically saying that even if you could look at damages, you should never have to. That's a big part of the problem. It leads to cases like this where people are heavily pressured to settle just to avoid the risk of crazy high statutory damages.

But where the government's argument goes off the rails, is the idea that when it comes to statutory damages, there's never a due process question over whether the rates are excessive. That makes no sense, but it's the argument being made:

Contrary to defendant’s contentions, the Due Process Clause does not require that the statutory damage award be proportional to the actual harm defendant has caused the plaintiff. Defendant attempts to derive this rule from BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). But as the district court held, Williams, not Gore, establishes the applicable framework for determining whether an award of statutory damages under the Copyright Act comports with due process.

Gore is inapposite. It imposes limitations on a jury’s authority to award punitive damages in circumstances where the legislature has not constrained the jury’s discretion. It thus requires that the jury award not be grossly disproportionate to the plaintiff’s injury or defendant’s misconduct. Absent such limitations, the Gore Court reasoned, defendants could not have fair, constitutionally sufficient notice of the magnitude of potential sanctions.

The Gore framework, however, does not apply to a statutory regime in which Congress has specified in advance the range of appropriate damages. In that circumstance, the statute itself supplies the constitutionally required notice deemed missing in Gore. Moreover, unlike jury awards of punitive damages, an award of statutory damages is based on legislative judgments that must be accorded deference by the reviewing court. Williams, not Gore, sets forth the appropriate standards for conducting such review.

To summarize this argument, it's that Congress can do whatever the hell it wants in setting statutory rates, and no one can ever question if those rates are "excessive." Effectively, it's saying that Congress doesn't have to obey the Constitution. That makes no sense. And yes, it relies on this Supreme Court ruling from 1919, which is a pretty narrow ruling, concerning conditions under which you could measure such regulatory fines against the due process clause. However, this argument really tries to make that case do a hell of a lot more than it was designed to do -- while also trying to pretend that a whole series of other cases involving excessive fines as they relate to due process don't matter.

Either way, the end result is that the administration is effectively saying that a $1.5 million award for sharing 24 songs isn't just perfectly legal and reasonable, but that it's what Congress intended. All it really does is reiterate just how out of touch the White House is to reality.

Filed Under: jammie thomas-rasset, joel tenenbaum, michael davis, nancy gertner, statutory damages
Companies: riaa

Supreme Court Refuses To Hear Tenenbaum Case; Allows Charade To Continue

from the onwards-and-onwards dept

As we expected, the Supreme Court has refused to hear the appeal by Joel Tenenbaum's lawyers to jump straight to the Constitutional questions concerning the ridiculous statutory damages awards for sharing a couple dozen songs. While reports are claiming that the Supreme Court has "upheld the $675,000" damages award, that's slightly misleading. At this point, the court simply refused to hear the appeal. As we pointed out in our post last week, this is really a procedural issue now. A jury had awarded $675,000 and Judge Nancy Gertner reduced the award based on Constitutional reasoning, rather than going through the remittitur process (allowing the record labels to request a new trial). The Appeals court rejected this saying that judges are supposed to avoid the constitutional questions if there's another way.

So, all this really means at this point is that the process is going to get extended (which certainly works in the RIAA's favor). It seems likely that the judge will now use the remittitur process to lower the award, and the RIAA will (once again) choose to have the case heard again. Eventually, it might be able to make its way up the appeals chain again. Or, Tenenbaum could decide that too much of his life is being wasted on this and just settle (which is what the RIAA is hoping for). So, today's refusal to hear the appeal isn't as big a deal as some are making it out to be, but it sure sucks for the guy who's at the center of this.

Filed Under: joel tenenbaum, procedural issue, statutory damages
Companies: riaa

Tenenbaum To Supreme Court: Let's Get This Constitutional Debate On Statutory Rates For Copyright Infringement Rolling

from the or-the-trolls-win dept

You may recall that, in the case of Joel Tenenbaum -- who is in a legal battle with some major lbels for file sharing -- a jury awarded the labels $675,000 for the sharing of just a few songs. The judge, Nancy Gertner, pointed out that this seemed unconstitutionally excessive and reduced the award to $67,500 -- knocking 90% off the jury's award. The appeals court in the case reinstated the original $675,000 on procedural grounds. It said that Judge Gertner jumped the gun in leaping to the constitutional question, rather than using remittitur, as had been done in the Jammie Thomas case. Remittitur would allow the RIAA to have the case happen all over again with a new jury. In the Jammie Thomas case there have already been three trials.

Tenenbaum, led by famed lawyer/law professor Charles Nesson, challenged the appeals court on all of this, but had that quickly rejected. As we noted at the time, Nesson seemed to (as he's done in the past) argue points unrelated to the specific legal questions at issue. This seemed like a bad way to go about things in a court of law, even if it may help in the court of public opinion.

The latest is that Tenenbaum/Nesson have filed to raise the issue with the Supreme Court. At least the argument here is a bit more focused on the requirement for remittitur, with Tenenbaum's team arguing that the statutory damages for non-commercial use is clearly a major Constitutional issue, and by forcing it through the remittitur process, all the courts are doing is pressuring people like Tenenbaum to settle, rather than ever allowing it to be judged on constitutionality. And that has consequences -- namely in enabling copyright trolls to shake people down, without ever allowing them to challenge the constitutionality of massive statutory damages.

I actually think this is a much more persuasive argument than I've seen from Team Tenenbaum in the past, but it seems unlikely that the Supreme Court will actually take the case on. I hope I'm wrong (and then, if I am wrong on that, I hope I'm wrong in my guess as to how it will come out, because this version of the Supreme Court doesn't appear to understand the issues around copyright law). Either way, we should find out soon enough.

I do think it's interesting that Nesson is using the copyright troll issue as part of the argument. Eventually, this or an issue like it will get to the Supreme Court, and hopefully the Justices realize just how damaging such practices can be:

They use the asymmetric cost of litigation to make defense by the individual economically irrational.

This Court should do everything it can to remedy this misuse of process. Its effects are not ended because the RIAA has ceased suing individuals. Others are using the legal structure and litigation tactics they have put in place.4 The weight of federal litigation is not a tool appropriately used to suppress legal challenge. The absence of cases pending in the federal courts highlights the problem: a deeply misshapen judicial architecture has been set in place. Without review, it is unfixable. The suppression of ability to challenge a process that is repeatedly producing appalling results, not circuit splits, is exactly why this case is worthy of this Court's present attention.

It's an interesting argument to get around the lack of a circuit split (conflicting rulings in different circuits, which is one of the key reasons why the Supreme Court agrees to hear certain cases). However, I just don't think the Court will think it's a big enough deal to jump on it, perhaps figuring that it can bounce back up eventually. Of course, that only underlines the point: for that to happen, it means years more of Tenenbaum's time wasted with this case. That seems unfortunate.

Filed Under: charles nesson, file sharing, jammie thomas, joel tenenbaum, riaa, scotus, statutory damages

Judge Ridicules Oracle's Risky Choice To Forego Statutory Damages And Seek Bigger Payout

from the wow dept

We've written tons of stuff on the ridiculousness of statutory damages for copyright infringement -- which can put damages for a single infringement at up to $150,000 (for willful infringement). When you're talking about a $0.99 song, that seems completely out of line. The reason for statutory damages (supposedly) is that figuring out actual damages is simply too difficult, so a statutory range lets you ignore any discussion of having to prove real damages. In most copyright lawsuits, plaintiffs automatically take the statutory damages rates. It's pretty rare for anyone to opt-out. However, opting out is exactly what Oracle has done in its ongoing lawsuit against Google. And it did this despite the judge ridiculing the company for the decision. From Rachel King at ZDNet:

When Alsup heard Jacobs say this, he warned that if Oracle goes down this path, they might not win anything at all, adding that it is the “height of ridiculousness” to think that Oracle could claim “hundreds of millions” of dollars for nine lines of code.

“The law can’t operate that way,” Alsup said. “In my mind, you’re making a mistake.”

In a later discussion on Friday morning, David Boies, also representing Oracle, tried to defend this strategy, arguing that the burden of proof is on Google here — not Oracle.

“What we are saying is once you proved infringement, we think under the law we have claim for infringer’s profit case,” Boies asserted.

The only thing I can figure here is that Oracle is doing this just to be a pest. Even if it does eventually win on the copyright issue (still an open question given the judge needing to rule on the copyrightability of APIs), it's not going to get that much money either way. The $150,000 statutory damages numbers are pocket change for either company, but as the judge made clear, in all likelihood it would get less (or nothing) if it tries to get "infringer's profits," because the contribution of the code in question is so minimal. However, it is possible that the fight over what those "profits" might be will simply prolong the case... and the expense of the case. So perhaps this is just a strategy by Oracle to drag things out? Maybe its lawyers are hoping that will make Google want to settle? Other than that, I'm with the judge in being a bit perplexed by the reasoning here.

Filed Under: api, statutory damages
Companies: google, oracle

Company Caught Downloading Competitor's Software Just Has To Pay The Fee To Buy One License

from the seems-more-reasonable dept

Here's an interesting case highlighted by Eric Goldman, involving two competing software companies. One of the companies, Real View, downloaded an infringing copy of the other company's (20-20 Technologies) software via a file sharing network. It seems this part is not contested. Real View then used the software to learn about what 20-20 was offering, and modified its own software to include some similar features, and then used a different business model which undercut 20-20's business model quite a bit. 20-20 sued for infringement both over the download and over the software. The jury, quite reasonably, said that the new software didn't violate anyone's copyright, as reverse engineering similar features to a competitor is not infringement.

However, since the initial download was infringing, the jury did have to rule on the damages there. I'll let Eric summarize this part:

20-20 argued that Real View should pay $38M, which is the amount 20-20 spent to buy a competitor company. Failing that, 20-20 argued that Real View should pay $2M due to "price erosion." Real View said it should pay 20-20's standard license fee of $4,200--although apparently 20-20 wouldn't have licensed the software at all to Real View, making the license fee calculation somewhat hypothetical. Real View also admitted to about making three-quarter million dollars in profits from its own licenses.

The jury came back with an award of $1.37M. In this ruling, the judge issued a remittitur down to $4,200, holding that Real View only was liable for the license fee for the unauthorized download--everything else wasn't proved or was irrelevant. For example, the court rejects all of 20-20's arguments about Real View's "saved development" costs as speculative. Perhaps more importantly, 20-20's claims of price erosion were irrelevant; any price erosion occurred due to Real View's non-infringing competitive software, not the infringing software download itself, and 20-20 didn't prove the causal link between the two well enough. Similarly, the court says 20-20 can't get any of Real View's profits from the non-infringing competitive software simply because it was facilitated by the illegal download.

This seems perfectly reasonable, and it's too bad that the jury seemed to have completely ignored the basics and seems to want to punish Real View for competing legally. Thankfully, the judge saw through that and reduced the jury's award. Of course, as we've seen with the remitittur process in the Jammie Thomas case, that allows 20-20 to "reject" the remitittur and get a new trial -- which appears to be exactly what 20-20 is doing. Again to Eric:

This case is interesting because it highlight how copyright owners can easily overclaim damages. Even if one step in the defendants' process involving infringing activity, that doesn't mean that the copyright owner gets to disgorge the defendant of all of its profits. For example, if a defendant impermissibly scrapes a plaintiff's website--making unauthorized copies into RAM while doing so--but the defendant's resulting publication doesn't infringe the plaintiff's copyright, arguably this case would take the defendant's profits off the table, leaving only the potentially meager and overly speculative damages from the illegal download.

I agree, but I also think it's interesting because it's rare that we see copyright cases where they argue over actual damages, rather than statutory damages. Copyright holders love to jump straight to statutory damages, because they tend to be so high (and totally out of proportion with actual damages). That's why something like this ruling is interesting, as it suggests (again) that perhaps the payment for downloading music should be the cost of licensing it for personal use -- or around $1. But as with the Jammie Thomas and Joel Tenenbaum trials, juries seem to massively inflate what they'd like to award for damages, even if there's no evidence that the downloads directly caused any real or significant damage.

Filed Under: actual damages, competition, copyright, license, statutory damages
Companies: 20-20 technologies, real view

BSA Wants To Export Insane Statutory Damages For Copyright Infringement To Other Countries

from the going-in-the-wrong-direction dept

The Business Software Alliance (BSA) has a long history of being on the wrong side of history. It does little to actually help the software business, but instead, it tries to be the RIAA of the software business by looking to promote innovation-destroying policies to prop up the obsolete business models of a few giant companies; for example, its yearly joke of a report about "losses" to the industry from infringement. It's such a joke that the research firm that conducted the research, IDC, admitted that the BSA was deliberately misinterpreting its findings (and yet, IDC continues to do the same report every year for the BSA). The BSA has also misrepresented ACTA, argued against open standards and (most famously) has long been noted for its questionable "raids" on companies, where if you can't find the receipt for every copy of Microsoft Office, they claim you infringed.

The BSA's latest move is -- once again relying on its own bogus stats -- to suggest that Europe and other parts of the world need to import the horrible "statutory damages" for copyright concept that the US uses, effectively ratcheting up the punishment for infringement without ever having to show actual damages.

As the European Union considers changes to its intellectual property rules, it needs to make sure that higher damage payments deter pirates, who often benefit because of insufficient fines, said Warren Weertman, manager of legal affairs for Washington-based Business Software Alliance....

“Lump sum damages would act more as a deterrent than having two actuaries fight it out in a costly court case,” Weertman said in a phone interview from London. “It’s a vicious circle where the damages aren’t deterrent enough.”

Of course, this is ridiculous for a few different reasons. First off, the BSA is (as noted above) famous for concocting ridiculously bogus calculations of "damages" from infringement. And here, suddenly, they're afraid to bring those stats into court to prove actual damages? Seems like the BSA is basically admitting that it knows its own numbers are complete bunk.

Second, and more importantly, Weertman seems to have fallen sway to the total myth that greater enforcement stops infringement. This has been debunked so many times, it's not even funny. When even the death penalty doesn't deter infringement, you would think that people would start to realize that ratcheting up enforcement isn't the answer. Earlier this year, we pointed to the massive, incredibly thorough SSRC report on media piracy which presented tremendous amounts of evidence that greater enforcement does not slow down infringement.

If anything, greater enforcement and ridiculously high statutory awards for infringement do the exact opposite of what the BSA thinks it's supporting. That is, when people hear about crazy amounts of money owed for sharing just a few infringing files, it doesn't make them respect copyright law more. It makes them think that the numbers are so out of touch with reality, that copyright law itself is a joke. It makes people respect the law even less. And yet here are the clueless BSA execs thinking it's a smart strategy.

Filed Under: copyright, statutory damages
Companies: bsa

Former RIAA Lobbyist, Now Judge, Says Lowest Possible Statutory Damages For Single Case Of Infringement Is $3,430

from the punishment-does-not-fit-the-crime dept

Remember Judge Beryl Howell? She's one of the only judges who's received one of these copyright troll cases involving hundreds, if not thousands, of totally unrelated John Does in a single case to refuse to sever the unrelated defendants (and bizarrely tried to claim it was to their benefit to be sued together). It only later came out that Howell was very recently an official lobbyist for the RIAA. At the very least, that calls into question her objectivity on copyright cases.

Anyway, late last week, Judge Howell also made an interesting ruling in one of US Copyright Group's cases, involving the movie Call of the Wild. Like her earlier ruling, this one will have many more copyright trolls filing cases in her district, hoping to get a judge so amenable to the arguments of copyright trolls. The ruling was a default judgment, meaning that the guy being sued simply did not respond to being sued (a dumb move). Of course, with a default judgment, the court still has some leeway in ordering what kind of award is given, and in this case, Judge Howell has apparently decided that the absolute minimum anyone could pay if found in default on a copyright case is not the $200 for innocent infringers, nor the $750 amount that is the official minimum listed in the law... but, rather $3,430, which is the $750 amount plus another $2,680 in lawyer's fees. That's a bit strange since it's not all that common to award attorney's fees in such cases, and considering that US Copyright Group is a factory of sorts, pumping out tons of these cases, and suing tens of thousands of individuals without much effort to ascertain the legitimacy of the lawsuits, it's difficult to see how it could have cost them that much at all.

Still, have no fear that this particular default judgment will be waved around by USCG and others in their shakedown letters to people who are being pressured into paying up.

Filed Under: beryl howell, copyright, default judgment, statutory damages

RIAA Files Expected Appeal Over Judge's Decision To Decrease Jury Award In Jammie Thomas Trial

from the how-dare-the-judge-be-reasonable! dept

The RIAA's war against reasonableness continues. As totally and completely expected after Judge Michael David reduced the jury award against Jammie Thomas-Rasset from $80,000 per song shared to a still ridiculous $2,250 per song shared, the RIAA has now appealed the case to the Eighth Circuit appeals court. Now is when the case finally starts to get more interesting. The RIAA is actually challenging three parts from the three prior trials (as you may recall, the first two were tossed out). Specifically, the RIAA is asking:

Whether the District Court erred by concluding that making a copyrighted work available for download on an online file-sharing network is insufficient to constitute a 'distribution' under 106(3) of the Copyright Act, and therefore refusing to enjoin Defendant from making Plaintiffs' copyrighted sound recordings available to the public.

Whether the District Court erred by concluding that it had committed an error in instructing the jury that making a copyrighted work available for download on a online file-sharing network constitutes a "distribution' under 106(3) of the copyright Act and therefor vacating the jury's verdict and ordering a new trial.

Whether the District Court erred by holding that the jury's award of statutory damages for defendant's willful copyright infringement violated the due process clause even though it was well within the range of damages awards authorized by 504(c) of the Copyright Act.

All three are interesting legal questions. The last one may be the biggest, but the hardest to succeed on. The reasoning used so far by two different judges in dropping jury awards is that the jury awards were so out of line with reality that they violated due process. The RIAA is scared to death that any sort of reasonable awards be associated with copyright law, because they're still under the ridiculously misguided belief that absolutely insane judgments for millions of dollars will scare people into no longer sharing files. The thing is, it's likely they have this misjudged in a big, bad way. The awards in the millions of dollars for just a few songs seem so incredible and so unfathomable, that most people simply think it's impossible. I honestly believe that they'd have a lot more luck if the fines were seen as much lower and much more within the grasp of the average file sharer. But the RIAA is not known for thinking logically.

The first two issues are actually important as well, though they'll get less attention. It's a key fighting point by the RIAA: which is whether or not a copyright holder needs to prove actual distribution to show an infringement of the distribution right under copyright law... or if merely "making available" constitutes distribution. This has been a major point of contention. The RIAA relies on a case about library books to say that merely "making available" is a violation of the distribution right, but other rulings and basic common sense on what constitutes distribution, suggest that merely making available is not, in fact, distribution by itself.

Filed Under: appeal, constitution, copyright, distribution, jammie thomas, making available, statutory damages
Companies: riaa

Judge Decreases Amount Jammie Thomas Owes For File Sharing Again (Yes, Again); Says It's Appalling

from the do-we-get-to-do-it-a-fourth-time? dept

Check out Judge Michael Davis. After the second Jammie Thomas-Rasset case had a jury return an award of $1.92 million for her sharing of 24 songs, the judge reduced the award from $80,000 per song to three times the statutory minimum of $2,250 per song. Of course, this resulted in a wild freakout by the RIAA... and a third trial. In the third trial (just on the award amount), the jury went with $62,500 per song shared, or $1.5 million total. Considering the massive freakout last time, you might think that Judge Davis would just be done with this, but instead, he's sticking to his guns, once again reducing the award to the same $2,250 per song. This really makes it the third time he's overturned the jury (though, the first time was because he felt he gave improper jury instructions).

Of course, the RIAA will once again freak out and this will be appealed. The judge's ruling, though, is well worth reading, calling the jury award of $1.5 million "appalling":

The Court concludes that an award of $1.5 million for stealing and distributing 24 songs for personal use is appalling. Such an award is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable. In this particular case, involving a first-time willful, consumer infringer of limited means who committed illegal song file-sharing for her own personal use, an award of $2,250 per song, for a total award of $54,000, is the maximum award consistent with due process.

This reduced award is punitive and substantial. It acts as a potent deterrent. It is a higher award than the Court might have chosen to impose in its sole discretion, but the decision was not for this Court to make. The Court has merely reduced the jury’s award to the maximum amount permitted under our Constitution.

He notes that, given the past experiences with this dispute, he's "loath" to do this again, but "the Constitution and justice compel the Court to act."

Judge Davis is clearly aware that the RIAA would freak out about this, and lays out, in great detail, his arguments for why the original awards are unconstitutional (as a violation of due process) and why the maximum fine he believes is allowed under the Constitution would be the $2,250 per song he changed the award to.

The RIAA, of course, will continue to claim that the ridiculous million dollar plus awards for sharing 24-songs are perfectly appropriate. They'll claim, as they have in the past, that the fact that multiple juries came up with this amount shows that the public agrees such ridiculous fines are normal. As per usual with the RIAA, they're being misleading. The reason that juries reach such disproportionate awards is because of the way the choices are framed to the jury. There are all sorts of studies on how framing influences a jury, and how juries don't actually consider the proportional response of the offense to the punishment.

There's one other interesting bit in the ruling that won't get much attention. That is that the RIAA asked for an injunction barring Thomas-Rasset from infringing any further, and the court grants it... in part. It's the part that it doesn't grant, which is interesting. The RIAA asked for the court to say Thomas-Rasset should be barred from "making available" any copyrighted works via file sharing programs, but the court, correctly (despite the RIAA's long-term effort to pretend otherwise), points out that there is no "making available" right within copyright law. The Court is short and sweet on that point:

Plaintiffs further request that the Court include language in the injunction barring Defendant from making any of Plaintiffs’ sound recordings available for distribution to the public. Plaintiffs argue that, if Thomas-Rasset makes Plaintiffs’ copyrighted works available on a peer-to-peer network, she will have completed all of the steps necessary for her to engage in the same illegal distribution of Plaintiffs’ works for which she has already been found liable. Because the Court has held that the Copyright Act does not provide a making-available right, it will not enjoin Thomas-Rasset from making the copyrighted sound recordings available to the public.

While there's nothing really new here, it's nice to see that point reinforced once again. Making available, by itself, is not copyright infringement, despite the industry's attempts to portray it as such.

Filed Under: appeal, constitution, copyright, jammie thomas, statutory damages

Statutory Damages In Copyright Law Make It More Appealing To Sue Than To Innovate

from the problem-in-a-nutshell dept

There are all sorts of problems with copyright law today, but one of the biggest is the farce that is statutory damages. This is what allows everyone who sues someone for a single instance of copyright infringement to threaten them with the possibility of a $150,000 fine. Of course, even in situations where the $150,000 isn't available, we still end up with rulings that seem totally disconnected from any actual "harm." Defenders of the statutory damages provisions in copyright law come up with all sorts of twisted rationalizations for why ridiculously high statutory damages rates make sense, usually along the lines of saying that there's simply no reasonable way to calculate actual damages. This is, of course, silly. Even if you can't calculate exact damages, you can come up with something that at least approaches a reasonable level.

However, the completely unrealistic statutory damages have created other problems as well -- and defenders of the statutory damage rates may want to pay attention here, since it actually makes life a lot worse for the content creators copyright law is supposedly supposed to "protect." It's highlighted in some comments from Pandora's CEO Joe Kennedy, noting that it's tough to build a legitimate online music service these days because it's a better business model for copyright holders to sue:

"The statutory damages clause (of copyright law) creates a moral hazard... It's too attractive to sue. It's a better business model than saying, 'I'll partner with you and build a business.' The lawyers in the music industry spent too much time suing and fighting, in lieu of developing better business partners."

While he goes on to say they're better about it today than in the past, it's still very much true today as well. As we've highlighted, the recording industry has a long history of suing first and negotiating later. In fact, there was a time when pretty much any halfway respectable music startup was being sued by a record label. The labels recognized that hanging that liability over the startups' heads was a way to force them into a negotiating corner. That's no way to build innovative music services. And, of course, even when the labels did end up negotiating, they would use those huge statutory damage threats to wring ridiculous rates out of the startups -- rates that made it impossible to build a real business.

So isn't it about time that we dumped these statutory damage rates? Or drastically lowered them? Unfortunately, you hear no movement in that direction.

The rest of Kennedy's interview is interesting as well. He notes how it's difficult-to-impossible to build a global internet music company due to different copyright laws around the world, and the ridiculous royalty rates demanded by holders in each country. And, he notes that copyright law, itself, needs a massive rethink in the age of computers:

"There is a really fundamental problem that's going to keep coming up over and over again. Computers, in the digital world, work by making copies. I think that we're going to continue to trip over this very fundamental issue. This is the frustration of a computer-science guy in a roomful of lawyers. Until there's some conception of what a copy is in a digital world... there are going to be a whole bunch of cases that are going to be kind of a crap-shoot."

Filed Under: copyright, innovation, statutory damages
Companies: pandora