This post has been updated for clarification purposes, in response to points raised in the comments.
Last Friday, another glowing example of out-of-proportion statutory damage awards came down from the federal court in Boston: Joel Tenenbaum, a 25-year-old physics PhD student, was found liable for the willful infringement of 30 songs and was ordered to pay $675,000 in statutory damages. Before the trial, the court quickly threw out the possibility of a fair-use defense, leaving Tenenbaum with little hope—although it’s questionable whether the outcome would have been different if his rather weak fair-use defense had been allowed. Tenenbaum flagrantly disregarded the law, continuing to share files on KaZaA throughout the court proceedings, so it was no surprise that he was found liable. But that doesn’t change the fact that $675,000 is grossly disproportionate to the offense.
Back in September 2008, we talked about the vastly disproportionate $222,000 in statutory damages awarded to the RIAA by a Minnesota jury, the result of single mother Jammie Thomas-Rasset having shared 24 songs on a P2P network. A federal judge later granted Thomas-Rasset a new trial, due to flawed jury instructions regarding the evidence required to prove infringement. In the court opinion, the judge called the award of hundreds of thousands of dollars in damages “unprecedented and oppressive,” especially given that the infringer was a private, non-commercial entity who sought no profit and engaged in acts that are “illegal, but common.” Last month, the retrial resulted in a surprising conclusion: $1.92 million in statutory damages—almost 9 times greater than the original verdict. While we don’t condone Thomas-Rasset’s actions, that’s $80,000 per $0.99 infringed song.
The great irony here is that these excessive penalties, meant to compensate the music industry for lost profits stemming from illegal downloads, come at a time of growth in the industry. A recent UK study on the music industry shows that although the overall sales of music retail products have slowed, other sectors of the industry have grown more than the decline in retail. Another recent study demonstrated that more and more users are now moving away from unlawful P2P filesharing networks, in favor of legal streaming and purchasing options.
Although the RIAA claims that this is the last civil lawsuit it plans on pursuing (from now on, the trade group plans to focus on kicking alleged filesharers off of the Internet under “three strikes” regimes), it is still deeply troubling that these two individuals will surely have to file for bankruptcy. Such large punitive damages like these will be used to threaten innocent parties into settling out of court to avoid the same fate. Half a million to 2 million dollars in damages should never be an option against someone who—no matter how unsympathetic they may be—did not make a single dime from infringing the equivalent of 2 or 3 albums—worth about $50 on a good day.