A $675,000 Damages Award for Illegal File Sharing Joel Tenenbaum’s Ferocious Battle Against the Music Industry

Article Date: Monday, February 28, 2011

Written By: Vlad Vidaeff

In June of 1999, Napster burst onto the scene and quickly attracted the hearts of high school and college students across the country. Napster was originally a peer-to-peer file sharing network, where users could download mp3 songs from other users for free. By 2001, however, Napster lost a copyright infringement suit and closed its doors (at least free access) to its millions of users. In the meantime, other networks have risen over the years to offer similar perks including AudioGalaxy, Morpheus, Kazaa, and Limewire. See Napster, available at http://www.crunchbase.com/company/napster (last accessed Jan. 17, 2011).

To combat individuals downloading music online illegally, the Recording Industry Association of America (RIAA) has worked to protect the intellectual property rights of musicians and music labels by suing copyright infringers. RIAA encompasses around 85% of recorded music that is produced and sold in the U.S. See RIAA- Who We Are, http://www.riaa.com/aboutus.php (last accessed Jan. 17, 2011). To date, only two copyright infringement cases involving RIAA have gone to trial. One is the interesting case involving Joel Tenenbaum, a doctoral student in physics at Boston University who has been accused of downloading and distributing 30 copyrighted songs using file-sharing software. See Judge Slashes Penalty in Illegal Music Downloading Case by Jonathan Saltzman, July 9, 2010, http://www.boston.com/news/local/breaking_news/2010/07/judge_slashes_p.html (last accessed Jan. 17, 2011). As is usually the case in illegal file-sharing disputes, Tenenbaum was a college student when his activities were exposed. After a series of battles that started in 1999 between Tenenbaum and the RIAA, Nancy Gertner, a district judge in the United States District Court in Massachusetts, slashed the jury’s damages award in favor of RIAA, from $675,000 to $67,500 on July 9, 2010. Sony BMG Music Ent. v. Tenenbaum, 721 F. Supp. 2d 85 (D. Mass. 2010).

To place the damages amount into perspective, the only other case of this sort that has gone to trial to date was the Jamie Thomas-Rasset case, which gave RIAA a damages prize of $2,250 per song, the exact same ratio seen in the Tenenbaum case. See Judge Slams, “Slashes ‘Unconstitutional’ $675,000 P2P Award” by Nate Anderson, available at http://arstechnica.com/tech-policy/news/2010/07/judge-slams-slashes-unconstitutional-675000-p2p-award.ars (last accessed Jan. 17, 2011). Much more frequently, these disputes have led to settlements between the parties where the average settlement is from $3,000-$12,000. See Joel Fights Back, available at http://joelfightsback.com/about-the-case/overview/ (last accessed Jan. 17, 2011). Compare this to the average price of a song from a major record company that is sold to a company such as Apple through its iTunes program or the current fee-based Napster is 70 to 80 cents per song. Multiplying this 70 cent figure by the 30 songs that Tenenbaum was sued for downloading means that Tenenbaum deprived the RIAA of $21 in revenue. Tenenbaum, 721 F. Supp. 2d 85 at 112.While the $21 figure may be misleading as there are more factors to consider when deciding on an award for damages, the original $675,000 award given by the jury in the Tenenbaum case shocked Judge Gertner on constitutional grounds.

In what has been called by some a major setback to the recording industry, Judge Gertner held that the jury’s award of $675,000 was “unconstitutionally excessive,” “simply unprecedented and oppressive,” and could not hold its ground under the Due Process Clause of the 14th amendment. Id. at 89. Initially, Judge Gertner’s reasoning may seem perplexing after analyzing the ‘Digital Theft Deterrence and Copyright Damages Improvement Act of 1999’ promulgated by Congress. This Act allows statutory damages provisions of up to $150,000 per infringement if the violation is committed willfully (it was in fact held at trial that Tenenbaum was guilty of copyright infringement in a willful manner). 17 U.S.C. § 504 (2006). By doing the math, the jury awarded statutory damages of $67,500 for each infringement, which is under the $150,000 maximum. In deciding that the jury award was unconstitutional, Gertner first looked at the legislative history behind the Act. As Napster was in its infancy at the time of the passage of the Act, Gertner reasoned that Congress never intended for the Act to subject ordinary people like Joel Tenenbaum to large damages award for illegal file sharing without a financial motive. Tenenbaum, 721 F. Supp. 2d 85 at 89. (“there is substantial evidence indicating that Congress did not contemplate that the Copyright Act’s broad statutory damages provision would be applied to college students like Tenenbaum who file-shared without any pecuniary gain.”)

Most interestingly, Gertner struck a populist bell by using the same reasoning that has been used to protect corporations currently and in years past: Tenenbaum, 721 F. Supp. 2d 85 at 90. With respect to large corporations, several cases involving parties such as BMW and State Farm have paved the way for the reduction of “grossly excessive punitive awards” on constitutional grounds. After companies had argued against “out of control” jury awards for years, the courts started a trend of favoring corporations by looking to the Due Process Clause. See “Judge Slams, Slashes ‘Unconstitutional’ $675,000 P2P Award.” By using the same reasoning seen in these cases, Gertner delivered a strong message: the Due Process clause not only protects corporations, but also ordinary citizens such as Joel Tenenbaum. In deciding to reduce the award by 90%, Gertner held that the jury’s award is far greater than needed to serve the government’s “legitimate interests” in protecting copyright owners and preventing infringement. Tenenbaum, 721 F. Supp. 2d 85 at 89.

What does the future hold for the relationship between illegal file sharing committed by ordinary citizens and the high ceiling for possible statutory damages awards? While the RIAA continues to pursue illegal file sharers, the U.S. Copyright Group has similarly joined the hunt. In fact, this group has sued more than 20,000 file sharers for illegally sharing indie movies. See “US Copyright Group Targets 20,000+ BitTorrent Users” by Jared Moya, March 30, 2010, available at http://www.zeropaid.com
/news/88532/us-copyright-group-targets-20000-bittorrent-users/ (last accessed Jan. 18, 2011). These sort of mass campaigns targeting ordinary individuals have caught the attention of several judges across the country, such as Judge Gertner. After decisions such as the Tenenbaum case and the Thomas-Rasset case, it will be interesting to see whether Congress takes a revised stance on the issue in the future. Furthermore, Tenenbaum is planning to appeal the decision as he states that he does not have the resources to pay the damages amount. See “Joel Tenenbaum to Appeal 90% Reduced File-Sharing Penalty,” August 26, 2010, http://torrentfreak.com/joel-tenenbaum-to-appeal-90-reduced-file-sharing-penalty-100826 / (last accessed Jan. 28, 2011).

Vlad Vidaeff is a second-year law student at the Wake Forest University School of Law. Mr. Vidaeff has an interest in pursuing a career practicing intellectual property law after graduation. Mr. Vidaeff thanks Thanh Ngo for her editorial advice.

Portions of this article originally appeared in the Wake Forest Journal of Business and Intellectual Property Law Blog, which can be found at http://ipjournal.law.wfu.edu/blog /. Web site content or other published materials owned by the Wake Forest JBIPL may not be used without written confirmation from the Wake Forest JBIPL that Copyright Permission has been granted.

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