Intellectual Property Law

Is $22,500 Per Song Unconstitutional?

By Tim Armstrong, Derek Bambauer, and William McGeveran.

The guns in RIAA v. Tenenbaum have gone temporarily silent; now, there’s post-game analysis and preparations for the next phase: challenging the jury’s award of $675,000 in damages ($22,500 per song, at 30 songs). Ben Sheffner’s Billboard column gives a great summary of the fight. Tenenbaum’s side will claim that the Copyright Act’s statutory damages provision is unconstitutional, pointing to a line of Supreme Court cases. The RIAA will naturally disagree. And Judge Gertner will think about whether to lower the damages. (Pam Samuelson and Tara Wheatland have written a superb paper on this that you have to read to have a sense of what’s going on in this debate.) Here’s my guess as to how this will turn out:

1. Judge Gertner will reduce the damages somewhat.
2. She will find that the statutory damages provisions of the Copyright Act do not contravene constitutional protections under the Gore line of cases.
3. The First Circuit will affirm.
4. The Supreme Court will deny cert.

I think the damages provision might be vulnerable in a specific defendant’s case (though Ms. Thomas-Rasset would be a better test than Mr. Tenenbaum here), but is safe on its face. In lawyerspeak, it’ll survive a facial challenge, but might fail as-applied.

The Gore limits depend in part on the concept of notice: defendants should know ahead of time how much they’d be liable for if they violate the law. No one expects punitive damages of 500:1 (Gore) or 145:1 (State Farm). But predicting liability - at least at its minimum / maximum amounts - is easy for copyright law. That’s a key difference between a statutory damages scheme, with a range specified by the legislature, and a common-law one where juries pick a number from a hat.

Second, the range of damages in the Copyright Act looks reasonable on its face. $30,000 per work (and up to $150,000 for willful infringement) is a lot, especially if it’s just to deter (or compensate for harm by) a single defendant. (General deterrence is out under Philip Morris v. Williams, which is sad for law & econ thinkers.) Imagine a business that runs off copies of “Harry Potter and the Deathly Hallows” in its basement and sells them. Copyright infringement of this one work is clear, but the business carefully shreds all evidence of sales. So, it’s impossible to prove actual damages; businesses are often risk-averse, meaning that higher awards of damages are needed to deter; and there’s only 1 copyrighted work at issue. Statutory damages are important to provide any deterrence - since proof of harm is under the infringer’s control - and since the infringement might be quite profitable, an award might need to be high (even $150K). Hence, the damages scheme is clearly rational in at least some cases.

The harder question is whether the unconstrained jury discretion for statutory damages could run afoul of due process protections. Individual downloaders tend to be pretty similar if you think about it: there’s not much difference between Thomas and Tenenbaum. So why is her penalty almost 4 times more per work than his, for the same type of infringement? Neither has much in the way of monetary resources, so they’re either undeterrable, or able to be deterred at a fairly low amount (marginal value of a dollar and all that). Here is where the damages scheme seems like it might be vulnerable: it does get hard to predict liability in some individual cases, and the wide range of damages looks a bit too much like absolute discretion. (Thought exercise: what if a jury could award any amount of damages per infringement? Would that improve deterrence against Tenenbaum and Thomas? Would it be significantly less accurate than the actual damages, which everyone agrees are pretty low in real terms? But such a framework would likely run afoul of constitutional limits.)

If this is right, it means that both sides should worry - as should Congress. Getting damages right is important, but preserving both procedural and substantive protections for defendants is just as much so. Comments and disagreement welcomed…

Full post as published by Info/Law on August 11, 2009 (boomark / email).