Judge slams, slashes "unconstitutional" $675,000 P2P award; ArsTechnica.com, 7/9/10

Nate Anderson, ArsTechnica.com; Judge slams, slashes "unconstitutional" $675,000 P2P award:

"Judge Nancy Gertner knows that Joel Tenenbaum did it. Tenenbaum, the second US target of the RIAA's five-year litigation campaign to complete a trial, eventually admitted his music-sharing liability on the stand—and Judge Gertner issued a directed verdict against him. But when the jury returned a $675,000 damage award, they went too far. Way too far.

In fact, according to Gertner, they trampled the Constitution's "Due Process" clause. In a ruling today, the judge slashed the $675,000 award by a factor of 10, to $67,500.

Two for two

If it sounds like a familiar result, it should. In Minnesota, Judge Michael Davis used a different legal approach called remittitur to lower Jammie Thomas-Rasset's liability from $1.9 million to $2,250 per song. That amount is three times higher than the $750 minimum for statutory damages, and Judge Gertner has accepted both Judge Davis' number and his reasoning when issuing her own opinion.

"Weighing all of these considerations, I conclude that the jury’s award of $675,000 in statutory damages for Tenenbaum’s infringement of thirty copyrighted works is unconstitutionally excessive," she wrote. "This award is far greater than necessary to serve the government’s legitimate interests in compensating copyright owners and deterring infringement. In fact, it bears no meaningful relationship to these objectives. To borrow Chief Judge Michael J. Davis' characterization of a smaller statutory damages award in an analogous file-sharing case, the award here is simply 'unprecedented and oppressive.'"

And, just like Davis, Gertner made clear that she was deferring to Congress and to the jury by even allowing this amount to stand. "This amount is more than I might have awarded in my independent judgment," she said. "But the task of determining the appropriate damages award in this case fell to the jury, not the Court. I have merely reduced the award to the greatest amount that the Constitution will permit given the facts of this case."

When Judge Davis used remittitur—essentially an application of judicial discretion—to cut the Minnesota award, he set himself up for a third trial in the Thomas-Rasset case, one that will get underway in October. (Remittitur only works when the plaintiff accepts it; if not, the plaintiff has the right to a whole new trial.)

But Gertner doesn't want another trial, because she's concerned that she will face the same issue again in the future.

"The plaintiffs in this case [the music labels], however, made it abundantly clear that they were, to put it mildly, going for broke," she wrote. "They stated in open court that they likely would not accept a remitted award. And at a retrial on the issue of damages, I would again be presented with the very constitutional issues that the remittitur procedure was designed to avoid. I am thus obliged to deal with Tenenbaum’s constitutional challenge."

And in ruling on that challenge, Judge Gertner simply couldn't believe that Congress meant for "the Copyright Act’s broad statutory damages provision [to] be applied to college students like Tenenbaum who file-shared without any pecuniary gain."

Gertner points out that large companies have complained for years about "out of control" jury verdicts, and that courts had repeatedly sided with corporations against absurdly large damages on Constitutional grounds. Those protections apply to everyone.

"Reducing the jury’s $675,000 award, however, also sends another no less important message: The Due Process Clause does not merely protect large corporations, like BMW and State Farm, from grossly excessive punitive awards," she wrote. "It also protects ordinary people like Joel Tenenbaum."

"We will contest this ruling"

We checked in with the Recording Industry Association of America (RIAA), which was—as you might suspect—not pleased at having another federal judge reduce a P2P damage award.
"With this decision, the court has substituted its judgment for that of 10 jurors as well as Congress," it said in a statement. "The judge appropriately recognized the egregious conduct of the defendant, including lying to the court about his behavior, but then erroneously dismisses the profound economic and artistic harm caused when hundreds of songs are illegally distributed for free to millions of strangers on file-sharing networks. We disagree with court's reasoning and analysis, and we will contest this ruling."

Congress hasn't yet acted to bring some kind of sanity to the damage awards in these cases, so it looks as though federal judges are now making a concerted effort to establish precedent for reasonable damages. Both Davis and Gertner have settled on $2,250 a song—far lower than the $150,000 per-work maximum that was on the table in both cases.

In addition to irritating the RIAA, the ruling can't be good news for the US Copyright Group, which has filed 14,000 similar lawsuits in 2010 alone, targeting those who swap independent films online. The settlement letters in those cases make clear that, unless defendants cough up the cash, the US Copyright Group plans to seek the full $150,000 if the case goes to court. Judges appear to have other thoughts."

http://arstechnica.com/tech-policy/news/2010/07/judge-slams-slashes-unconstitutional-675000-p2p-award.ars