What Are the Constitutional Limits on Awards of Statutory

Damages in Copyright Litigation?

By Andrew Berger, Esq. For the John Marshall Law School

Center For Intellectual Property

Sony BMG v. Tenenbaum

Jury verdict of $675,000 in file sharing case

Tenenbaum willful infringer

Judge Nancy Gertner reduces award by 90% to $67,500

Some History: Skyrocketing Awards and Judicial Response

Awards Threatening Research Awards Threatening Research and Development of New and Development of New Products Products

Gore Gore held a punitive damages held a punitive damages award of $2 million award of $2 million unconstitutionalunconstitutional

The The GoreGore Guidelines: Guidelines: ReprehensibilityReprehensibility Ratio between actual Ratio between actual

damages and punitive awarddamages and punitive award Difference between the Difference between the

punitive award and applicable punitive award and applicable civil penaltycivil penalty

St. Louis Railway v. Williams

Two sisters each overcharged by 66 cents

Statutory damages award of $75 apiece-114 times more than the actual damage

Award constitutional

Williams Defers to the Judgment of Congress

Does the statutory damage scheme adequately respond to the public interest, the opportunities for committing the offense and the need to secure uniform adherence to the law?

When Will An Award Violate Due Process Under Williams?

The award must be so severe as to be disproportionate to the offense and obviously unreasonable

Remedies for public wrongs do not have to be proportioned to the actual damage

Are the Gore Guidelines Applicable?

Punitive damage awards raise notice and limits concerns

But statutory damages provide notice and limits

Punitive damages are designed to punish but statutory damages serve other purposes

More on Whether Gore Guidelines Applicable

Statutory damages authorized by Congress and therefore entitled to deference

Punitive damages awarded without statutory authorization and thus present no basis to defer to a legislative judgment

The First Guideline: Reprehensibility

Reprehensibility is already calibrated in Copyright Act: damage floor for innocent infringer; cap for non-willful and willful infringement

Only question should therefore be whether the statutory damage scheme is rational

Second Guideline: Relationship Between the Award and Harm

No application because statutory damages may be awarded without any showing of harm

Statutory damages are not conditioned on availability of actual damages

Williams: statutory damages are not to be compared with harm

One of the purpose of statutory damages is to relieve the copyright holder from the burden of proving actual damages

Third Guideline: Relationship Between the Award and Penalty

Irrelevant because the award = the penalty

Tenenbaum created safe harbor for non-commercial file sharers

Court relied on post-hoc comments by two Senators made after Digital Theft statute passed

College students may be toasting result

Tenenbaum’s Damage Calculation Problematic

Court first determined actual damages at $1 per song

Court relied on doctrine of treble damage But did not treble the actual damages it

determined Instead court trebled $750, the statutory

minimum

The Verdict Satisfies Williams Need to defer to Congress Jury’s verdict of $22,500 toward the low

end of the willful range which extends to $150,000

Tenenbaum’s conduct defines willfulness

Consequences if Tenenbaum Affirmed

Meritorious copyright claims may never be brought because of the inability to show actual damages

Relegating litigants to actual damages will also end may litigations because actual damages are often inadequate and may be too expensive to demonstrate

There may be no lost profits or none that can be established

What will the Supreme Court Do?

It will likely be deferential to the judgment of Congress

But Williams Needs Some Updating

It is nearly a century old Copyright landscape has changed Copyright holders now post on social

media hoping their works will be copied As copyright infringement becomes more

commonplace judicial response to infringement may change

Questions?

Contact Andrew Berger at (212) 702-3167 or berger@thsh.com.

Also visit www.ipinbrief.com