January 14, 2014 | By Mitch Stoltz

To Safeguard the Public Domain (and the Public Interest), Fix Copyright’s Crazy Penalties

In the week leading up the two-year anniversary of the SOPA blackout protests, EFF and others are talking about key principles that should guide copyright policy. Every day, we'll take on a different piece, exploring what’s at stake and and what we need to do to make sure the law promotes creativity and innovation. We've put together a page where you can read and endorse the principles yourself. Let's send a message to DC, Hollywood, Silicon Valley, Brussels, and wherever else folks are making new copyright rules: We're from the Internet, and we're here to help.

What if a single parking ticket carried a fine of up to a year's salary? What if there were no way to know consistently how much the fine would be before you got it? And what if any one of hundreds of private citizens could decide to write you a ticket? What would happen? People would start avoiding public parking, and stay home more often. Business would decline. The number of false or unfair tickets would rise. Everyone would lose confidence in the system—and in the law—as parking became a huge gamble.

Something very close to this scenario is a reality in copyright law. Copyright holders who sue for infringement can ask for "statutory damages" and, if they win, let a jury decide how big of a penalty the defendant will have to pay—anywhere from $200 to $150,000 per copyrighted work. That's a big problem for Internet users, and everyone else who wants to use creative works in lawful but non-traditional ways. Authors of remix video and fan fiction, bloggers, coders, entrepreneurs and others who create, inform, and empower on the fuzzy edges of copyright law must gamble every day. They risk unpredictable, potentially devastating penalties if a court disagrees with their well-intentioned efforts.

People from across the spectrum of opinion on copyright—including many who generally support more restrictive copyright law—agree that copyright damages are broken and need fixing. In today’s House Judiciary Committee hearing on the scope of copyright, Professors David Nimmer and Glynn Lunney agreed on almost nothing—but both agreed that copyright’s penalty regime makes no sense today.

Different from almost all other areas of the law, plaintiffs in copyright cases don’t have to present any evidence that they were harmed. And aside from setting some broad ranges of amounts for "willful" and "innocent" infringement, the only guidance that the Copyright Act gives to juries in picking an amount is to say that it should be "just."

So, not surprisingly, penalties in actual cases are hugely unpredictable. Sometimes judges and juries try to set a penalty at approximately the value of the infringing goods, or the loss suffered by the plaintiff. When the defendant is a repeat infringer or behaved egregiously, some courts award a small multiple of actual harm, such as double or triple damages, much like in other areas of the law.

Other times, judges and juries set massive penalties with no relationship to either the actual harm caused or the degree of moral condemnation that the defendant deserves. A website owner who copied two copyrighted poems, earning no profit and causing no more than minuscule economic harm, was ordered to pay $300,000.1 More famously, single mother Jammie Thomas-Rasset was ordered to pay $222,000 for sharing 24 songs online, even though the trial judge believed that the record labels' actual harm was about $50.2

Without guidelines, the penalties awarded change radically from case to case. One music industry company that sued three different defendants in separate suits for the same type of infringement won $10,000 per song in one case, $30,000 in another, and $50,000 in a third.3

This uncertainty, and the possibility of ridiculously high penalties, is toxic to creativity and innovation. High and unpredictable copyright damages are why many filmmakers struggle to obtain the liability insurance their financial backers require. They're part of why entrepreneurs with new products for using and interacting with creative work don't get funded. And they're a big reason why innovative companies like Aereo, Dish, Pandora, and software developers large and small must spend so much time and money on copyright lawyers instead of artists and engineers.

Massive penalties are also one of the main reasons why so many shady lawyers have turned to copyright trolling. Threats of six-figure penalties for sharing a movie or song are credible, because they have actually happened. For a home Internet subscriber, paying a troll $3,000 to go away can look like a better option than gambling with $150,000. Copyright damages can turn a failing movie into a lucrative shakedown scheme—with a cost in human misery. It's no wonder the public has a low opinion of copyright law.

People should be able to use copyrighted work in ways that benefit us all, without worrying that a court will bankrupt them if the court later decides they crossed a fuzzy line. And copyright's penalties should have some connection to actual harm, to keep trolls from using copyright suits as a shady business model. As Congress continues talking about fixing copyright, the penalties should be one of the first things they look at.

  • 1. Macklin v. Mueck, No. 00-14092-CIV-MOORE/LYNCH, 2004 U.S. Dist. LEXIS 28416 (S.D. Fla. Dec. 29, 2004).
  • 2. 579 F. Supp. 2d 1210, 1213, 1227 (D. Minn. 2008)
  • 3. Peer Int’l Corp. v. Luna Records, Inc., 887 F. Supp. 560 (S.D.N.Y. 1995); Peer Int’l Corp. v. Max Music & Entm’t, Inc., No. 03 Civ. 0996KMWDF, 2004 WL 1542253 (S.D.N.Y. July 9, 2004); Peer Int’l Corp. v. Pausa Records, Inc., 909 F.2d 1332 (9th Cir. 1990).

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