Tenenbaum and Statutory Damages

by Derek Bambauer

Monday, July 12, 2010 at 06:48 AM EDT

I've been thinking about the implications of Judge Gertner's ruling in Sony v. Tenenbaum, and have had the good fortune to discuss it with copyright expert Thinh Nguyen. One unexpected effect of the decision, I believe, will be to increase the cost of copyright litigation, perhaps significantly. Judge Gertner employs the Supreme Court's Due Process rulings on damages, especially punitive damages, to hold that there must be some relation (how close a relation, we're not sure) between actual damage / actual harm, and the amount of statutory damages awarded. This is problematic, for two reasons.

First, this means that copyright plaintiffs must make some showing of actual damages in order to receive statutory damages. Perhaps they can still obtain the Copyright Act's minimum level of damages -- $750 per work, with the potential of treble damages for willful infringement (as with Tenenbaum) -- but that minimum is unlikely to motivate many plaintiffs to enforce their rights. If they want more than the floor, though, plaintiffs will have to introduce some evidence or testimony about the sum of the harm they've suffered. This increases their costs. In the case of digital works, it may increase those costs significantly. One aspect of the Tenenbaum case that seems most dubious is the court's treatment of his infringement of the distribution right in the sound recordings he uploaded. (Props to Thinh for this point.) The judge effectively treats that harm as zero. But, this can't be right -- the other users who downloaded the songs may well have forgone purchases due to file-sharing, and this also means that Sony doesn't get any additional compensation for the uploads, as opposed to the downloads. The thought experiment is this: imagine Tenenbaum downloads an MP3 file that infringes. According to Gertner, the damages are about $.70. Now, Tenenbaum uploads the file to BitTorrent. What are the additional damages? According to Gertner, they are zero. That can't be right. However, proving actual harm from uploading / distribution is very hard, for technological reasons, as opposed to proving downloading. If plaintiffs want compensation for uploading, they'll have to go to the expense of providing that evidence.

Second, Gertner's ruling seems to imply that Congress cannot make the choice it has made here in the Copyright Act. Under the Act, plaintiffs can choose between actual damages (which must be proved with requisite certainty) and statutory damages. Picking statutory damages caps your award at $30,000 per work infringed, but relieves you of the need to prove actual harm. Congress did this in part because it's sometimes tough to demonstrate the amount of actual harm, even when it has clearly occurred. Well, if Judge Gertner's ruling stands, that's not longer quite the case. The actual damages proof framework starts to sneak into the statutory damages approach, unless Congress is more specific in its findings about what damages exist for various works (as the damages schedule used to be under the 1909 Act). Thus, either Congress has to tailor statutory damages more closely to actual ones through some factual findings and specific legislative provisions, or plaintiffs will have to fill the gap.

So, I think that this ruling has some troubling implications for damages awards in a zone -- digital media and file-sharing -- where proving actual harm is particularly hard. The Supreme Court's Due Process jurisprudence might in fact mandate this, but unless it's clear (I don't believe it is -- Gertner and I disagree on how to read Williams), I think the district court should have been more careful about the effects of this decision.

P.S. Please notice my prescience regarding predictions about this constitutional question. Evidently I need to consult Paul the Octopus before blogging.

This article originally appeared on Info/Law.