Is $22,500 Per Song Unconstitutional?

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…

6 Responses to “Is $22,500 Per Song Unconstitutional?”

  1. Derek:

    I have a question about your statement that “[g]eneral deterrence is out under Philip Morris v. Williams.”

    In Williams, the Supreme Court held that “the Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties….” But that’s not my understanding of what “general deterrence” is. Rather, I thought that general deterrence involves sending a message to other potential defendants: Don’t engage in this sort of conduct, or else you too will face this kind of punishment.

    And the Supreme Court’s holding in Williams does not seem to apply to what the jury did in the Tenenbaum case. The jury was not seeking to punish Tenenbaum for injury he allegedly caused to non-parties (e.g., other copyright owners who were not plaintiffs in this case). Rather, they seem to have intended the award of damages as a message to other potential infringers — a situation that I do not read Williams to be addressing.

    Do you think I’m misreading Williams?

  2. As you pointed out, the statutory range is generally quite useful. But, I keep imagining myself as a juror hearing an RIAA case – when I’m told the range of possible damages it’s essentially framing my choice. I don’t see these verdicts as purely the product of an average citizen’s view of the proper damages (although I’ve seen that suggested in other quarters).

    This is a quote (which I got from Copyrights & Campaigns) from a juror in the Tenenbaum case, “We worked in a spirit of true compromise. We worked very well together. It wasn’t easy to get to a number…. ”

    Awards are the results of such compromises so amounts are essentially pushed towards somewhere in the middle of the range.

    If, in these RIAA cases, we instead told jurors to pick a damage award between $100k and $3.5M per work, would they just choose something proportionally in a similar place within the range, even though it would be far higher in absolute amount than their award from the current range? Or would they all opt for the minimum amount of $100k since that’s theoretically closest to the awards they actually gave?

    I wonder how much the range amounts that jurors are told about actually end up influencing their decisions.

  3. @Ben: This is a great question about Williams. I’m about to re-read the case. Pam Samuelson’s article jogged my memory about Williams (I felt somewhat disappointed about the verdict at the time, because I like the general deterrence concept, at least as a theoretical matter). Here’s what Pam says:

    (p.20, n.143) – A corollary principle to Philip Morris is that the defendant before the court cannot be punished in order to deter others from engaging in similar wrongful acts. The punitive award may speak for itself as a deterrent to others, but for punitive damages to be awarded expressly in order to deter others is inconsistent with the Supreme Court’s due process jurisprudence. Yet, the force of Philip Morris as a precedent has been somewhat lessened by the Court’s unwillingness to hear the tobacco company’s appeal of the Oregon court’s refusal to lower the punitive award on remand.

    So, I need to figure out whether I agree with Pam, but if she’s right, then general deterrence seems hard, in the current Court’s view, to square with due process.

    Thanks!

  4. On re-read: I think Pam is likely right, but it depends on extrapolation from the Court’s decision in Williams. The key language seems to be (slip op. p. 6):

    we can find no authority supporting the use ofpunitive damages awards for the purpose of punishing a defendant for harming others. We have said that it may be appropriate to consider the reasonableness of a punitive damages award in light of the potential harm the defen-dant’s conduct could have caused. But we have made clear that the potential harm at issue was harm potentially caused the plaintiff.

    (emphasis in original)

    Thoughts?

  5. I agree there’s some ambiguity in there. But I think the court’s emphasis is on the sentence you quote about “the use of punitive damages awards for the purpose of punishing a defendant for harming others” (my emphasis). Again, this was not a case about punishing Tenenbaum for causing harm to other copyright owners; it was a case about deterring other potential Tenenbaums. I still don’t read Williams as addressing that situation.

  6. In my opinion, Pam is right, but as mentioned before it all depends on extrapolation from the Court’s decision in Williams.