The Future of Statutory Damages Against Digital Infringers - Fordham Intellectual Property, Media & Entertainment Law Journal
post-template-default,single,single-post,postid-689,single-format-standard,ajax_fade,page_not_loaded,,select-theme-ver-3.3,wpb-js-composer js-comp-ver-6.7.0,vc_responsive

The Future of Statutory Damages Against Digital Infringers

The Future of Statutory Damages Against Digital Infringers

In 2007, Joel Tenenbaum was served with a complaint, accusing him of copyright infringement stemming from the alleged download of seven musical works from a peer-to-peer network. This marked the start of his battle against the Recording Industry Association of America (RIAA) and, more broadly, the imposition of excessive statutory damages in cases of copyright infringement.

Statutory penalties enforced on copyright infringers are not new in the struggle to deter piracy, especially digital piracy, which has become more prevalent in the age of widespread broadband internet access. Sites like The Pirate Bay and peer-to-peer sharing programs, such as BitTorrent, have made it even easier for casual users to commit acts of copyright infringement at astounding rates. Each of these occurrences exposes individual users to devastating liability to copyright holders.

Section 504(a)(1) of the Copyright Act of 1976, states that a copyright infringer is liable for “the copyright owner’s actual damages and any additional profits of the infringer.” However, liability extends beyond actual damages, as section 504(c) allows for the copyright owner to “elect, at any time before final judgment is rendered, to recover instead of actual damages and profits, an award of statutory damages for all infringements involved in the action.”

The development of internet technology and the subsequent boom in digital piracy prompted the creation of the Digital Millennium Copyright Act (“DMCA”) and many revisions to copyright law, such as the Digital Theft Deterrence and Copyright Damages Improvement Act and No Electronic Theft Act (“NET act”).

The Digital Theft Deterrence Act increased the range of statutory damages to $700 to $30,000 for each instance of infringement. Furthermore, in instances of “willful” infringement, the act increased the maximum amount of damages that can be sought to $150,000 per infringement.

The NET act’s revisions changed the scope of criminal liability for copyright infringement by altering the definition of financial gain to include receipt, or expectation of receipt, of anything of value, including the receipt of other copyrighted works. This extends criminal liability to infringers even when no pecuniary gain was expected from the infringement.

The current state of copyright law set the stage for the case of RIAA v. Tenenbaum. Since the inception of these laws, the RIAA has lodged complaints against thousands of individuals, almost always resulting in settlement. What makes Joel’s particular case of alleged infringement so interesting is that he is challenging the legal foundation that allows the RIAA to make its claim.

With the assistance of Professor Charles Nesson of Harvard Law School, Joel is challenging the constitutionality of the statutory damages claimed by the RIAA. Professor Nesson takes issue with what he sees as the RIAA using the case as a method “of creating an urban legend so frightening to children using computers, and so frightening to parents and teachers of students using computers, that they will somehow reverse the tide of the digital future.”

It is Professor Nesson’s view that imposing up to $150,000 of damages is unconstitutional in part because the Digital Theft Deterrence is in essence a criminal statute, as it is punitively deterrent, and as such, Joel should be entitled to process protections of criminal law and a jury trial not in the ambit of a civil proceeding. Professor Nesson’s team bases this argument on the holding in Int’l Union v. Bagwell, 512 U.S. 821 (1994), which stated that mandatory flat fines are “criminal if [there is] no subsequent opportunity to reduce or avoid the fine.”

Additionally, it is contended that Congress exceeded its authority by allowing private parties to enforce what Nesson characterizes as a criminal statute. It is also asserted that statutory damages violate substantive due process of the Fifth and Eight Amendment, as they are “grossly excessive.”

What the defendant finds problematic is that the RIAA, a self-interested party, can bring actions to enforce mandatory fines that are not adequately publicized, and, with no political accountability, can elect to accept or reject payments in exchange for not prosecuting defendants. Additionally, the whole process places a high cost burden on defendants, which makes it unlikely they will even contest the merit of the claims. This is especially problematic considering that studies have found that current tactics used to detect copyright infringement among BitTorrent users can be used to frame them for copyright infringement, and alternatively, even without being targeted, innocent users may still receive complaints.

It is unclear whether Joel Tenenbaum will prevail in his defense. However, regardless of the outcome of the case, it has presented the opportunity to discuss the merits of the current scheme of enforcement afforded to copyright holders by copyright law.

The litigation raises the interesting question of what type of scheme would allow copyright holders to assert their rights against infringers, while maintaining a degree of fairness and transparency. There have been attempts in Europe, most notably France, to deter piracy, without resorting to the imposition of statutory fines. Although the French Parliament recently rejected it, both houses had approved a law that would cut off internet service to offenders. It is likely that the law will be passed in France when it is retabled later this year.

If Joel Tenenbaum prevails, it is uncertain whether Congress would consider passing a law of this kind in the United States. However, as the leaked “Anti-Counterfeiting Trade Agreement” between the U.S., Japan and the EU indicates, there is a great degree of international cooperation in developing law designed to protect intellectual property rights in an increasingly digital world.

George Kordas