November 5, 2010 | By corynne mcsherry

Thomas-Rasset Damage Award: The Strange, Unpredictable World of Copyright Damages

After a brief deliberation, a jury this week awarded $1.5 million in statutory damages ($62,500 per recording) to the record label plaintiffs in Capitol v. Thomas-Rasset. The case has repeatedly made headlines as the first action against an individual accused of illegal file-sharing to make it to the trial stage. As the litigation proceeded, however, the case (as well as another individual filesharing case, Sony v. Tenenbaum) has taken on new importance by shining a light on the irrationality of copyright remedies.

This is plain just in the Thomas-Rasset case alone. For reasons too complicated to detail in this post, three separate juries have considered how much Ms. Thomas should be forced to pay the record labels for sharing 24 songs. Their answers have varied dramatically:

Verdict 1: $222,000
Verdict 2: $1.92 million
Verdict 3: $1.5 million

That’s a swing of over $1.7 million total, with a change of over $400,000 just this last time, all over the same alleged infringement of the same 24 songs.

Judge Michael Davis put the problem well back in 2008, when he ordered a new trial on liability. Although the Order was focused on an erroneous jury instruction, not damages, the court noted that the jury’s award of $222,000 was simply irrational:

The Court would be remiss if it did not take this opportunity to implore Congress to amend the Copyright Act to address liability and damages in peer-to-peer network cases such as the one currently before this Court. . . . While the Court does not discount Plaintiffs’ claim that, cumulatively, illegal downloading has far-reaching effects on their businesses, the damages awarded in this case are wholly disproportionate to the damages suffered by Plaintiffs. Thomas allegedly infringed on the copyrights of 24 songs—the equivalent of approximately three CDs, costing less than $54, and yet the total damages awarded is $222,000—more than five hundred times the cost of buying 24 separate CDs and more than four thousand times the cost of three CDs. While the Copyright Act was intended to permit statutory damages that are larger than the simple cost of the infringed works in order to make infringing a far less attractive alternative than legitimately purchasing the songs, surely damages that are more than one hundred times the cost of the works would serve as a sufficient deterrent.
. . .

Unfortunately, by using Kazaa, Thomas acted like countless other Internet users. Her alleged acts were illegal, but common. Her status as a consumer who was not seeking to harm her competitors or make a profit does not excuse her behavior. But it does make the award of hundreds of thousands of dollars in damages unprecedented and oppressive.

Judge Davis is not alone in his concern for proportionality. Earlier this year, in an order reducing a $675,000 award against another individual file-sharer, Joel Tenenbaum, to $67,500, Judge Nancy Gertner held that the original award was “unprecedented and oppressive” and noted that even the reduced award was “more than [she] might have awarded in [her] independent judgment.”

While the jury saved Ms. Thomas-Rasset $400,000 this time, a $1.4 million dollar judgment is still the stuff of rock stars, not ordinary music fans. Based on his previous rulings, it’s likely that Judge Davis will reduce the award. But as both Judge Davis and Judge Gertner recognize, there’s a more fundamental problem here.

In most areas of civil law, we tie damages to actual harm, i.e., what is needed to make the person harmed “whole.” Even in the relatively rare case of punitive damages, intended to punish people who have willfully engaged in illegal conduct, we still require a proportional relationship between damages and actual harm. We do this in part because it is fair, and in part because it allows those whose actions test the law or arise in new circumstances to reasonably evaluate their legal risk. Yet when it comes to copyright, there’s no reasonable way to evaluate the risk: juries can award anywhere from $750 to $150,000 per work, and as the Thomas-Rasset case demonstrates, there’s no predictability even when the facts are exactly the same.

And that lack of predictability causes real harm, chilling speech and innovation. For example, copyright owners have used the DMCA notice and takedown process and various filtering systems to take down innumerable fair uses. One way to check this abuse is for fair users to challenge improper takedowns, counternoticing or bringing actions under 17 U.S.C. section 512(f). But few people are willing to do so. And a big reason for this is that our broken copyright system leaves them facing the prospect of paying outrageous statutory damages and even possibly attorneys' fees if they stand up, fight back, and, against overwhelming odds, lose the legal battle. It’s a gamble with their life savings (and more) that most people just aren’t willing to take, even when their works are clear fair uses and even if they have free legal help.

As Judge Gertner recognized, large and disproportionate damage awards like this also raise some important constitutional concerns grounded in basic fairness as well as the judicial concern about creating a “windfall” for plaintiffs.

First, the Supreme Court has made it clear that “grossly excessive” punitive damage awards (e.g., a $2 million award against BMW for selling a repainted BMW as "new") violate the Due Process clause of the U.S. Constitution. In evaluating whether an award "grossly excessive," courts consider three criteria: 1) the degree of reprehensibility of the defendant’s actions, 2) the disparity between the harm to the plaintiff and the punitive award, and 3) the similarity or difference between the punitive award and civil penalties authorized or imposed in comparable situations. Does a $1.5 million award for sharing 24 songs cross the line into "grossly excessive"? And should these Due Process limitations apply differently to statutory damages than to punitive damages? We don’t think they should.

Second, the jury was instructed that it could consider “the need to deter this defendant and other potential infringers” in determining damages. That is, they wanted the jury to consider not only Ms. Thomas-Rasset’s actions, but on the possible actions of others. This instruction was likely wrong -- the Supreme Court has disapproved damages awards designed to target harms that are not part of the case actually before the jury. In other words, the damage award should be aimed at deterring this defendant, not giving the plaintiffs a windfall in order to send a message to others who might be tempted to infringe.

Those interested in a more detailed discussion of these constitutional doctrines should start with an article by Prof. Pamela Samuelson & Tara Wheatland, Statutory Damages in Copyright Law: A Remedy in Need of Reform (full disclosure: Prof. Samuelson is a member of EFF's board of directors). In the meantime, we’ll continue to watch this case closely as it winds its way to conclusion, likely before an appellate court.


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