Looking More Closely At Judge Gertner's Constitutional Analysis Of Copyright Awards In Tenenbaum Case

from the the-battle-is-on dept

Last Friday, we quickly covered the news that Judge Nancy Gertner had declared the original jury award of $675,000 against Joel Tenenbaum for downloading and sharing some songs unconstitutionally excessive. Over the weekend, however, I had some more time to read the full ruling (posted by Eric Goldman) and get a sense of what Gertner's full argument meant. You can read the ruling here, and I highly recommend taking the time to read the whole thing: In it, she clearly explains why the Constitutional analysis was necessary (she could have just reduced the award using the remittitur process, but noted that the RIAA made it clear they would challenge such a ruling, and thus it would eventually come around to the Constitutional questions no matter what.

So with that in mind, she clearly gave a lot of thought to the Constitutional questions, and goes back to the key point, that if the punishment is seriously out of line with any sort of "harm" caused, then it's unconstitutional. She notes that she must give deference to Congress' intent with the statutory rates it set for copyright infringement, as well as to the jury's verdict. But, even so, she suggests that the jury's award was way out of line with reasonable awards in other copyright lawsuits... and (more importantly) way out of line with Congress' intent of using statutory rates to deter infringement:

This award is far greater than necessary to serve the government's legitimate interests in compensating copyright owners and deterring infringement. In fact, it bears no meaningful relationship to these objectives.

In attacking the Constitutional questions, Judge Gertner spent a lot of time highlighting the case law on the Due Process Clause, noting many, many cases where the Supreme Court has made it clear that there are limits to what should be considered Constitutional when it comes to jury awards -- even in the case of statutory awards (even if the courts often seem to rule that in the cases they're looking at, the line has not been crossed).

Defenders of both the original Jammie Thomas award and the Joel Tenenbaum award have frequently claimed that the case law (mainly the BMW v. Gore case) doesn't apply since that was not for statutory damages, where the rates are clear and already set. That's going to be a key point made in the inevitable challenge to this ruling. But Gertner aptly explains why it's reasonable to explore whether or not the award is unconstitutionally excessive, even when it's within the statutory rates, and even suggests that both the government and the RIAA are misreading other precedents -- with the key one being the Williams case, which found a damages award acceptable because it fell within statutory rates. Gertner points out that the RIAA and the government are taking that ruling out of context, and only looking at the result, rather than the actual reasoning.

At their root, the standards articulated in Williams, BMW, and State Farm all aim at providing defendants with some protection against arbitrary government action in the form of damages awards that are grossly excessive in relation to the objectives that the awards are designed to achieve. Indeed, early twentieth century cases such as Williams were the seedlings from which the Supreme Court's recent punitive damages jurisprudence sprouted.

She also notes that even in the Congressional record in efforts to increase the statutory rates, Congressional members suggested that courts would make sure the actual awards were reasonable and not excessive:

In fact, Senator Orrin Hatch, a sponsor of the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, which increased section 504(c)'s statutory damages ranges to their current levels, stated in remarks regarding a predecessor of that bill, "In most cases, courts attempt to do justice by fixing the statutory damages at a level that approximates actual damages and defendant's profits."

That line right there might be pretty damaging to the RIAA's typical claim that courts are just supposed to assume that Congress knows best in setting the rates, and shouldn't try to approximate actual damages with statutory rates.

From there, Judge Gertner applies the test found in the BMW case, and points out that (contrary to some of the silliest claims from copyright system defenders), Congress clearly did not expect lawsuits against individuals sharing files for personal use when it set such high rates:

Later statements by Senators Orrin Hatch and Patrick Leahy, two sponsors of the Digital Theft Deterrence Act, strongly suggest that Tenenbaum is correct; they did not anticipate that individuals such as Tenenbaum who engaged in noncommercial file-sharing would be subjected to liability for statutory damages under section 504(c). Hatch and Leahy presided over a Senate Judiciary Committee hearing titled "Music on the Internet: Is There an Upside to Downloading?" on July 11, 2000.... During the hearing, the committee members demonstrated how the peer-to-peer system Gnutella is used by downloading and then playing a song by the band Creed. ... As the committee was downloading the Creed song, Senator Leahy proudly proclaimed that he was doing some of his own downloading on his laptop. ... When one of the developers of Gnutella pointed out to the committee members that they might be engaging in copyright infringement, Senator Hatch responded that their downloading and public performance of the Creed song qualified as "fair use" since it was carried out for "educational and governmental purposes." ... Nevertheless, the senators' willingness to download copyrighted sound recordings through a peer-to-peer network during a committee hearing suggests, at the very least, that they did not view such downloading as particularly reprehensible.

And this inference from the senators' conduct is largely confirmed by their words. Although Senator Hatch noted that peer-to-peer technology had the capacity, "if misused, to rob [artists] of their livelihood," ... he also praised the development of Gnutella as "quite an accomplishment," ... And Senator Leahy added:

[W]hen I go on college campuses, as many of us do, to talk and everybody is talking about what they have downloaded, how they share, and so on, and when my kids pick up a "Black Muddy River," which happens to be one of my favorites of the Dead, and send it to me -- they have heard a new version -- and I log on in the morning while I am having my breakfast and there it is, I mean this is a whole different world, and I think we have to recognize that on where we go.

Senator Hatch's tolerance of, if not admiration for, peer-to-peer networks was even more on display at a special Judiciary Committee hearing held on October 9, 2000, at Brigham Young University ("BYU"). ... Shawn Fanning, the founder of Napster, was the star witness at this hearing, and Senator Hatch repeatedly praised Fanning, expressing how "proud" he was of Fanning and even suggesting that Fanning should become a professor at BYU or run for political office. ... Obviously, Senator Hatch's comments should be taken with a large grain of salt... But his comments nevertheless suggest that he did not anticipate that the statutory damages scheme over which his committee had jurisdiction would be applied to users of Napster and other peer-to-peer networks.

I have to admit that I was unaware of these quotes from Senators Hatch and Leahy -- both of whom are normally seen as being very strongly in favor of strict copyright laws (Hatch, famously, once suggested coming up with a way to destroy the computers of file sharers).

On top of that, Judge Gertner compares the fines for Tenenbaum with restaurants and bars that have not paid their licenses, noting that those are clear cases of infringement for commercial reasons, yet the fines are a small multiple of the cost of a license. She points out that this seems like a much more egregious case, yet the awards are much lower:

The jury's award in this case also appears egregious in light of the damages typically imposed on restaurants, bars, and other businesses that play copyrighted songs in their establishments without first acquiring the appropriate licenses. These defendants are arguably more culpable than Tenenbaum. Unlike Tenenbaum, who did not receive any direct pecuniary gain from his file-sharing, defendants in these cases play copyrighted music to create a more pleasurable atmosphere for their customers, thus generating more business and, consequently, more revenue.... In addition, defendants accused of unlicensed public performances often receive several notices that their conduct is unlawful before they are sued. Thus, like Tenenbaum's file-sharing, their infringing conduct is generally willful. .... Nevertheless, the awards in such cases are generally no more than "two to six times the license fees defendants 'saved' by not obeying the Copyright Act"--a ratio of statutory to actual damages far lower than the ratio present in this case.

Clearly, this case is nowhere close to over, but it is still interesting to read through the details of the ruling. Obviously, Gertner knows this is going to be appealed, and she put a lot of effort into making the case for why this ruling was excessive, in hopes of having her reasoning help carry the later appeals.

Filed Under: copyright, damages, jammie thomas, joel tenenbaoum, nancy gertner
Companies: riaa

Judge Says Damages In Tenenbaum Case Were 'Unconstitutionally Excessive'

from the the-riaa-is-not-going-to-like-that dept

It seems like the Joel Tenenbaum case is simply an echo on the Jammie Thomas case. Both lawsuits involved very flawed defendants who probably shouldn't have gone through with their fights against the RIAA. In both cases, juries awarded huge statutory damages awards to the record labels. In Thomas' case it was $1.92 million or $80,000 per song. In the Tenenbaum case, it was $675,000 or $22,500 per song. Even though both cases were what I considered to be "bad" cases (too much evidence that both Thomas and Tenenbaum were actually heavily involved in file sharing), both have used the rulings to challenge the statutory damages awards as being unconstitutional.. and now the judges in both cases have agreed.

As you probably recall, the judge in the Thomas case reduced the $1.92 million award to $54,000 (or $2,250 per song) and today comes the news that Judge Gertner in the Tenenbaum case has declared the original damages award to be "unconstitutionally excessive" and slashed the total by 90% down to $67,500. In both cases, the judges actually set the per song damages award down to $2,250. There were lots of questions when Judge Davis did this in the Jammie Thomas case if a judge could actually do that, and that's still being fought to some extent. It seems likely that, as with the Thomas case, the RIAA will appeal this particular ruling because it most certainly does not want a precedent on the books that can lower the statutory damages rate for copyright.

This could start to get very interesting. Both judges are clearly taking a stand that the actual statutory rates set by Congress are ridiculously high and totally out of proportion with the actions done by the defendants. There is definitely some precedent for ridiculously high damages awards being thrown out as unconstitutionally excessive... but not when it comes to statutory rates, where the courts have generally said Congress has great leeway to determine what is and what is not excessive. However, with two judges pointing out that a number within the range provided by Congress is excessive, it's setting up a potentially very important legal battle about the statutory damages associated with copyright.

The industry has always pushed for higher and higher damages, somehow believing that will act as a disincentive for infringing. Yet, there doesn't appear to be any evidence at all that it's working. Instead, such high damages have actually done the opposite. They've convinced many, many people of just how ridiculously unfair and out of touch copyright laws are. The general public can recognize that sharing a single file shouldn't lead to a fine of tens of thousands of dollars. It's so out of proportion with reality that they begin to question the overall setup of copyright law itself. The industry's focus on higher and higher copyright damages has been a major strategic mistake that has backfired. These rulings -- which the industry will fight tooth and nail -- might actually be a blessing in disguise for the industry. If the actual damages weren't so ridiculous, people probably wouldn't be so up in arms over copyright issues.

Filed Under: copyright, damages, jammie thomas, joel tenenbaoum
Companies: riaa