Bankruptcy

Bankruptcy Could Protect Jammie Thomas from RIAA Damages

By meaghano

In a strange twist to an already surprising case, a recent change to bankruptcy law could shelter Jammie Thomas-Rasset from the $1.92 million in damages she has been ordered to pay the Recording Industry Association of America, according to a CNET article.

Thomas-Rasset was recently found liable for willful copyright infringement and ordered to pay damages of $80,000 for each of 24 songs she was accused of sharing illegally over the Internet.

This is the second time that a jury has ruled against her.

In 2007, a jury ordered her to pay $222,000, but that decision was thrown out after the presiding judge acknowledged he had made a mistake while giving the jury their deliberating instructions.

She Might Not Have to Pay

In both instances, Thomas-Rasset has told reporters that she does not have the means to pay the RIAA and would not do so even if she were able.

According to Ira Rothken, an attorney who has represented Web sites that offer mechanisms for free file-sharing, the bankruptcy court may allow Thomas-Rasset to avoid paying the damages.

Historically, the bankruptcy law prevented a defendant from discharging the debt of someone found liable of willful copyright infringement.

However, Rothken believes that in 2008, the Ninth Circuit Court of Appeals found in the case of Barboza vs. New Form that ?willful? meant one thing in a civil trial and something else during bankruptcy proceedings.

In copyright cases, ?willful? simply means the defendant understood what they were doing.

According to the Ninth Circuit, bankruptcy laws mandate that for debt to be non-dischargeable, the plaintiff (the RIAA in this case) must prove that the defendant (Thomas-Rasset) was ?willful and malicious? in her actions, and intended to cause the RIAA harm.

Kathryn Bartow, an attorney whose firm often represents major film studios, wrote in February that ?(Barboza vs. New Form) serves as a warning to trademark and copyright owners as well as the counsel who represent them in willful infringement cases.?

Copyright Infringement and Bankruptcy

If the jury in her recent case had found Thomas-Rasset guilty of copyright infringement as opposed to the ?willful infringement? she was eventually declared guilty of, her debt would have been even easier to discharge.

?If she had one on that point,? Rothken says, ?[the debt] would be absolutely dischargeable without even having to have another hearing in bankruptcy court.

Now her conversation [with the RIAA] must be, ?Hey, if we can?t settle, I?m going to go forward and file for bankruptcy,? and they?ll say ?Well, you?ll have to have another trial.?

Fred von Lohmann, an attorney for the Electronic Frontier Foundation, which advocates for Internet-users, believes that proving Thomas-Rasset?s malice might be very difficult for the RIAA.

?No. 1, I?m not at all sure they?d be interested in trying this case again,? von Lohmann says. ?And No. 2, I?m not sure they?d win.?

The RIAA may not wish to push the matter to the point where Thomas-Rasset opts to seek shelter in bankruptcy. It has said that it wishes to settle the matter out of court, particularly since they have already achieved a coup by proving their case sufficiently to twenty-four average Minnesotans with no ties to the recording industry.

Pushing the matter further, many industry insiders agree, expends their public relations point and causes the group to be seen as bullies.

Full post as published by The Bankruptcy Blog on July 17, 2009 (boomark / email).