Today, the Senate approved an amended version of its version of IP enforcement bill (now named the PRO-IP bill to parallel the enforcement bill in the House). PK's press release is here.
As amended, the bill retained its increased forfeiture penalties for copyright infringement and media bootlegging, meaning that any number of multipurpose devices—even those not owned by the infringer—could get caught up in the net of forfeiture penalties. Nor does the amended bill contain any language (as did some earlier versions) requiring that the property be “substantially connected” to the offense.
Fortunately, some of the most worrisome provisions have been removed, including one that would grant the Attorney General the power to bring civil lawsuits against alleged infringers on behalf of copyright holders, and new forfeiture penalties for circumventing DRM.
But the focus on “enhancing” penalties by increasing them is worrisome. While there are legitimate uses for criminal forfeiture provisions, and even good arguments to be made for some types of civil forfeiture, the larger picture of penalties surrounding copyright infringement deserves a serious second look. Too often, penalties for crimes are only ratcheted upwards—it's a way to signal to constituents that Congress is being quantifiably tougher on that particular crime. Unfortunately, while that may be an easy way to suggest a commitment to enforcing the law, the actual results often do little to increase deterrence, while potentially chilling all manner of uses for copyrighted works.
It's hard to talk about copyright penalties without first mentioning damages, and statutory damages in particular. One of the great oddities of copyright law is the fact that an offense that costs the plaintiff one dollar can be paid back by penalizing the infringer an amount somewhere in between $750 and $30,000, possibly rising to $150,000 in cases of willful infringement. That's per work infringed, meaning that downloading ten different tracks—not an unusual activity for a casual P2P infringer—could incur a penalty of $1.5 million. Obviously, theoretical multiplications of statutory damages only mean so much—this only becomes a problem if a judge or jury actually starts awarding such high amounts for such petty offenses.
But they have. Jammie Thomas, a Minnesota resident, was sued for downloading twenty-four songs from a P2P network, for which she was penalized $222,000. That's $9,250 per song, when each digital file, had she bought it off of iTunes, Amazon, or any number of other digital music stores, would have given the copyright owner less than one dollar.
The justifications for this extreme amount can be found in a combination of (1) the need to deter infringement (and compensate owners) in cases where it's hard to peg a specific amount of harm, and (2) a statute that really never, in its inception, contemplated digital technology.
As for the first part, it's easy to see how the concept of statutory damages can be a real benefit in copyright cases. A lot of times (such as with unreleased material or material intended to be published for free) it's hard to determine just how much a plaintiff lost from the infringement. Setting an automatic dollar value can ensure not only that the plaintiff gets something. Setting statutory damages can also help ensure deterrence: a savvy defendant might otherwise decide to take a chance on infringing a work if he figures that the plaintiff will not bother with a lawsuit to only recover a speculative or nominal amount of money. Setting a wide range of values for statutory damages also makes some sense, since damages are calculated by the number of works infringed—making hundred of copies of one CD would still have the same maximum statutory penalty as making one copy of that CD.
Given the state of technology today, though, it's a rare infringer that actually makes this calculation. In the case of most casual downloaders, the calculation probably has more to do with a question of how much they're individually hitting a copyright holder's bottom line (minimally), with no particular thought as to the expense of litigation. Whereas a commercial infringer—the sort originally contemplated by copyright law—might make hundreds or thousands of copies of a work, the home downloader makes one. Yet that same yawning range of penalties is available, and set before a jury. A value between $750 and $30,000? With that range, $9,250 falls somewhere below the median. Fair, right?
Well, not really—and a judgment like that fails to accomplish the goals of the statute. Recently, a federal court in Minnesota granted Jammie Thomas a new trial, based upon flawed jury instructions regarding liability. Yet the judge felt compelled to make a note of the damages issue, devoting the final section of his opinion to this detailed, thought-out plea:
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. The Court begins its analysis by recognizing the unique nature of this case. The defendant
is an individual, a consumer. She is not a business. She sought no profit from her acts. The myriad of copyright cases cited by Plaintiffs and the Government, in which courts upheld large statutory damages awards far above the minimum, have limited relevance in this case. All of the cited cases involve corporate or business defendants and seek to deter future illegal commercial conduct. The parties point to no case in which large statutory damages were applied to a party who did not infringe in search of commercial gain.
The statutory damages awarded against Thomas are not a deterrent
against those who pirate music in order to profit. Thomas’s conduct was motivated by her desire to obtain the copyrighted music for her own use. The Court does not condone Thomas’s actions, but it would be a farce to say that a single mother’s acts of using Kazaa are the equivalent, for example, to the acts of global financial firms illegally infringing on copyrights in order to profit in the securities market. Cf. Lowry’s Reports, Inc. v. Legg Mason, Inc., 271 F. Supp. 2d 737, 741?42 (D. Md. 2003) (describing defendants as a “global financial?services
firm” and a corporation that brokers securities).
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.
Thomas not only gained no profits from her alleged illegal activities, she sought no profits. Part of the justification for large statutory damages awards in copyright cases is to deter actors by ensuring that the possible penalty for infringing substantially outweighs the potential gain from infringing. In the case of commercial actors, the potential gain in revenues is enormous and enticing to potential infringers. In the case of individuals who infringe by using peer?to?peer networks, the potential gain from infringement is access to free music, not the possibility of hundreds of thousands – or even millions – of dollars in profits. This fact means that statutory damages awards of hundreds of thousands of dollars is certainly far greater than necessary to accomplish Congress’s goal of
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.
And petty offenders like Thomas aren't the only ones harmed by disproportionate penalties. When a new media device or service is invented and runs up against the business interests of a copyright holder, these statutory damages can put a startup with a legitimate case for fair use at an automatic disadvantage when it comes to simply being lawyered out of business. Even with a good legal case, the threat of astronomical damages can cause an innovator to settle before a complaint is ever filed.
The forfeiture penalties broadened by the PRO-IP Act now stack another penalty on top of this flawed structure. Over the years, the statutory damages themselves have been pushed upwards—tripling from their 1976 values. New crimes, like videotaping movies in a theater, or recording liver concert performances, are layered on top of copyright.
And while these additional, flawed structures are being piled on, the baseline of penalties itself remains a shaky foundation upon which to build.