Should Congress Cap Statutory Damages for Copyright Infringement at 100x Actual Harm?

Cecilia Gonzalez downloaded 30 copyrighted sound recordings using a peer-to-peer file-sharing program. The downloads were unauthorized by the holders of copyright in the works; accordingly, Gonzalez infringed. Had she purchased the 30 songs off iTunes (for example) at 99¢ each, her out-of-pocket cost would have been (say) $30. After subtracting the commission Apple collects from iTunes sales, the net revenues to the copyright holders would have approximated $15. Thus, we might suppose, the amount of harm to the copyright holders from Gonzalez’s infringing activity can be quantified with reasonable precision: it’s $15. When the copyright holders sued Gonzalez for copyright infringement, however, they were awarded not $15, but $22,500 — 1,500 times the actual harm. What is even more remarkable, the $22,500 figure was the bare minimum to which the copyright holders were entitled under 17 U.S.C. § 502(c)(1): the statute provides for damages of $750 to $30,000 per work infringed (and upon proof of willfulness, up to $150,000). The $22,500 damage award against Gonzalez came from multiplying her 30 infringing downloads times the $750 statutory minimum.

I was thinking of Cecilia Gonzalez’s case when reading the news that the trial judge in the Jammie Thomas file-sharing case (previously covered here) has ordered a new trial. The core legal issue on which the new trial order turned isn’t the size of the damage award ($222,000 based on 24 infringed works). Rather, it’s whether a copyright plaintiff must prove, in order to show a violation of its exclusive right under § 106(3) “to distribute copies or phonorecords of the copyrighted work to the public,” that an actual distribution or transfer occurred. The court initially answered that question in the negative; now, apparently moved by more recent cases holding that merely “making available” a copyrighted work for download isn’t enough, it has changed its mind. But even though the new trial in Thomas’s case rests on the court’s evolving understanding of the distribution right, the court’s opinion concluded with a lengthy passage criticizing the same court’s own damage award against Thomas as irrational. From pp. 42–43 of the court’s new trial order:

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.

I’m inclined to agree that awarding $750 for infringing a 99¢ copyright is a pretty stiff punishment, and that the magnitude of possible injustice increases rapidly as we begin to multiply each of those figures times greater and greater numbers of infringing acts. And let’s not forget how easy it is, in the file-sharing context, to cross the line into criminal liability: under § 506(a)(1) as amended by the No Electronic Theft Act, all that is required is “reproduction or distribution … during any 180–day period, of … 1 or more copyrighted works, which have a total retail value of more than $1,000.”

If you want a poster child for the excesses of copyright damage awards, however, it’s probably best not to pin your hopes on Jammie Thomas. The facts of the case, at least as I understand them (and I never followed the trial as closely as Bill did) seem to suggest that Thomas in fact did share copyrighted songs with unknown numbers of other persons. (Fred Yen, for one, seems to think the RIAA is not going to have much trouble proving actual distribution if the retrial happens.) The apparent unfairness of such high multipliers between the damage award and the underlying actual harm may abate somewhat if the court is persuaded that the underlying harm is actually greater, due to the possibility that many other file-sharing users may have downloaded songs from Thomas.

But there’s a better candidate out there for illustrating the excesses of the existing statutory damage award scheme, and that’s Cecilia Gonzalez, who is not alleged to have shared a single song with anyone else. (In technical terms: she’s a downloader, not an uploader.) By the time we’ve multiplied $750 times 30 to reach Gonzalez’s damage award of $22,500, the question whether that award is excessive in view of the $15 in actual harm to the plaintiffs practically answers itself.

More on the new trial order in the Thomas case via Ars Technica, EFF, The Register, and Slashdot.

2 Responses to “Should Congress Cap Statutory Damages for Copyright Infringement at 100x Actual Harm?”

  1. I’m not a constitutional law expert, but is there any chance that the due process constraints imposed by the Supreme Court in BMW v. Gore and Exxon Shipping v. Baker might apply to Congressional legislation as well? Are there any due process constraints on statutory damages, or is the “notice” worry that BMW and Exxon focus upon solved by the availability of the statutory schedule for damages? Just a thought.

  2. [...] Last year, the trial judge who presided over the trial of accused file-sharer Jammie Thomas suggested that the jury’s award of $222,000 in statutory damages in the first trial may have been excessive. [...]