Hefty Fine for Sharing Music Online Upheld
(CN) - A $675,000 fine against a man who illegally downloaded and distributed at least 5,000 songs for several years is not unconstitutional, the 1st Circuit ruled.
Joel Tenenbaum had been sued for copyright infringement in 2007 by Sony BMG Music Entertainment, Warner Bros. Records Inc., Arista Records LLC; Atlantic Recording Corp. and UMG Recordings.
Although Tenenbaum "apparently distributed far more" songs, Sony only pursued claims for 30 copyrighted works.
"During discovery, Tenenbaum lied about his activities, blaming unidentified burglars and a foster child living in his parents' home" for the pirated songs, Judge Jeffrey Howard wrote for the three-judge appellate panel. "Only at trial did Tenenbaum admit that he had distributed as many as five thousand songs."
A federal judge found that Tenenbaum violated the Copyright Act, and a jury found that his violations were willful.
The court instructed the jury that the Copyright Act provides for damages between $750 and $150,000 for each violation, and gave the jury a set of nonexhaustive factors that it might consider, including the nature of the infringement, Tenenbaum's intent, his profit and revenue lost by the music companies, among other things.
A jury then awarded Sony $22,500 for each of Tenenbaum's 30 violations, representing 15 percent of the statutory maximum fine and totaling $675,000.
Tenenbaum asked for a reduction, arguing that the award was so high that it violated his right to due process.
U.S. District Judge Nancy Gertner agreed and reduced the fine to $67,500, relying on a Supreme Court ruling in BMW of North America Inc. v. Gore that found that an excessive award of punitive damages can violate due process.
On appeal from Sony, the 1st Circuit found in 2011 that Judge Gertner should have instead reduced the award by the procedural process known as "remittitur."
Gertner then determined that remittitur was inappropriate and that the original award of $675,000 comported with due process.
The Boston-based federal appeals court affirmed the second time around, finding that Gerner had correctly applied the Supreme Court ruling in St. Louis, I.M. & S. Rv. Co. v. Williams, which considered the constitutionality of an award of statutory damages.
"Statutory damages under the Copyright Act are designed not only to provide 'reparation for injury,' but also 'to discourage wrongful conduct,'" Howard wrote.
Indeed, Congress increased the maximum statutory awards under the Copyright Act because of new technologies that would allow Internet users to steal copyrighted works.
"At trial, Sony presented evidence that Tenenbaum's activities led to the same type of harm that congress foresaw: loss off the value of its copyrights, reduced income and profits, and job losses," Howard wrote.
"The evidence of Tenenbaum's copyright infringement easily justifies the conclusion that his conduct was egregious," Howard added. "Tenenbaum carried on his activities for years in spite of numerous warnings, he made thousands of songs available illegally, and he denied responsibility during discovery. ... We do not hesitate to conclude that an award of $22,500 per son, an amount representing 15 percent of the maximum award for willful violations and less than the maximum award for non-willful violation, comports with due process."
Although Tenenbaum argued that the award violates due process because it is not tied to the actual injury that he caused - which he estimates to be no more than $450 - "we find Tenenbaum's arguments unpersuasive," Howard wrote.